Web-hosting company Endurance International Group (EIGI) is thinking about selling itself to another player, and that sent shares higher on Monday. The stock has lost over 50% of its value over the past five years, showing its long-term struggles. But investors celebrated the rumored sale by sending the stock 18% higher for the session.
According to a Bloomberg report citing anonymous insiders, Endurance International is open to the idea of being acquired, two years after considering it the first time. The company owns well-known brands like Bluehost and HostGator, platforms enabling its users to develop a web presence. However, it hasn't been able to monetize its properties of late.
Full-year revenue declined for Endurance International in both 2018 and 2019. More recently in the second quarter of 2020, revenue fell 2% year over year to $274 million. But declining revenue aside, the company could hold value for a larger player. Consider Endurance International has 4.9 million subscribers and added almost 100,000 in Q2.
Unfortunately, since this is an unconfirmed rumor, today's news isn't actionable for Endurance International shareholders. If it's true the technology company is to be acquired, we can't yet say if that's good or bad. After all, we have no idea how much of a premium another company would be willing to pay. Conversely, if the acquisition rumor is false, then nothing changes for investors.
Best to approach Endurance International stock under the assumption it remains an independent, publicly traded company. If it gets bought out, that could create upside. But if it doesn't, at least you'll be prepared with a long-term outlook.