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Why ANGI Homeservices Stock Lost 11% in February

By Jeremy Bowman - Mar 6, 2020 at 4:50PM

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Shares of the home-improvement marketplace fell after a weak earnings report and on the COVID-19 coronavirus sell-off.

What happened

Shares of ANGI Homeservices (ANGI) took a hit last month as the online home-improvement marketplace posted underwhelming fourth-quarter results at the beginning of the month and then fell on coronavirus fears toward the end of February. According to data from S&P Global Market Intelligence, the stock finished down 11%.

As you can see from the chart below, the stock slipped initially on its earnings report and then fell off at the end of the month on the coronavirus sell-off.

ANGI Chart

ANGI data by YCharts.

So what

ANGI stock pulled back 6% on Feb. 6 after its fourth-quarter earnings report came out. Adjusted revenue for the company, which is made up primarily of HomeAdvisor, Angie's List, and Handy, increased 19% to $321.5 million, which was slightly below expectations at $325 million. Adjusted EBITDA in the period fell 17% to $54.8 million as the company continues to invest in its fixed-price platform, and spends aggressively on marketing to drive growth. It also reported breakeven earnings per share, which matched analyst expectations. 

A plumber fixing a pipe underneath a sink.

Image source: Getty Images.

In its guidance, ANGI forecast adjusted EBITDA of $200 million to $250 million, compared with $202.3 million last year. But investors may have been expecting more growth as EBITDA fell in 2019 due in part to an error with its marketing spending.

The stock actually recovered those losses in the following days, but then fell alongside the market in the last week of February. There was no clear reason for ANGI's decline other than the broader market falling. In fact, as an online marketplace, and one that has more demand on its platform than supply, ANGI shouldn't be that vulnerable to coronavirus-related issues, though a recession could cause homeowners to spend less on improvements.

Now what

The stock has continued to fall through the first week of March, losing another 16% even as the S&P 500 finished up slightly. ANGI Homeservices has been an underperformer on the market in recent years, and investors seem to be punishing weaker stocks, especially those that could be vulnerable to a widespread outbreak and a weakening economy. Still, the company looks better positioned than the market thinks, but given the issues in the fourth-quarter report, the stock will likely need some good news in order to bounce back.

   

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