Angie’s List (ANGI) Plummets 16 Percent After Slashing Membership Costs

Jacob Harper |

In a bid to attract customers to their contractor-review site, on Oct. 3 Angie’s List Inc. (ANGI) unexpectedly cut membership costs in 75 percent of markets, lowering the cost of an annual membership from $40 to $10. The price slash comes mere days after CTO Manu Thapar abruptly left, shaking investor confidence in the tech company.

Analysts, however, remain bullish on the Indianapolis-based site. 13 out of 20 analysts polled by Thompson Reuters give the stock a rating of "buy," and the consensus price target remains 40 percent higher than the current price.

Investors feel much differently. 37.91 percent of the float on the stock is being sold short, the highest rate of any stock currently being traded on the US markets.

Even before the membership price slash and Thapar’s departure, Angie's List bears had questioned the sustainability of a site that is increasingly losing market share to the wildly popular Yelp Inc. (YELP) . On In their Sept. 10 article “Ain’t it Time to Say Goodbye to Angie’s List” Forbes writer David Trainer pointed out that the company has never made a profit, and is doomed by “its complete lack of profitability and shaky business model.”

CEO William Oestrele has waved off fears that the company is slipping, claiming the new membership model is merely a test as executives continue "trying to understand the impact on member acquisition and retention." Investors, however, are clearly worried that it the move is less likely experimentation and more likely necessity prompted by slipping membership rates.

Despite analyst bullishness that puts a consensus price target of $29 a share on Angie’s List, for now the market is definitely skittish on the stock. The stock plummeted 16.25 percent to hit $17.58 a share.

 

(image courtesy fo Flickr)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ANGI Angie\'s List Inc. 10.00 -0.02 -0.20 341,733
GLAG Gala Global Inc 0.01 -0.00 -3.80 60,000
YELP Yelp Inc. Class A 37.95 0.70 1.88 1,549,555

Comments

Emerging Growth

InMed Pharmaceuticals Inc.

InMed is a clinical stage biopharmaceutical company that specializes in developing novel therapies through the research and development into the extensive pharmacology of cannabinoids coupled with innovative drug delivery systems.…

Private Markets

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…

Pinterest

Pinterest is a visual discovery and planning tool. Users ("Pinners") use the site and apps to get ideas for their future, such as recipes, places to travel, and products to…