Why Angie's List's Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online local-service ratings expert Angie's List (NAS: ANGI) popped sharply in early trading today, gaining as much as 12% before settling back down to a more modest gain.
So what: The trigger for the pop was a strong first-quarter earnings report. For the quarter, the company managed $31 million in revenue, up 76% from last year. Meanwhile, on the bottom line, the loss per share of $0.24 was less than the expected $0.26.
The growth for the quarter was driven by a huge 81% jump in total paid memberships. Profitability was helped by a 16% year-over-year drop in the marketing cost per paid-member acquisition.
Now what: It appears that Angie's List's management also has a more optimistic view of the quarter ahead than Wall Street did. While analysts were expecting revenue of $34.3 million for the second quarter, the company provided a guidance range of $34.5 million to $35.5 million.
Of course, with all of that good news, why did the early day spike in the stock's price settle back down? That's a bit unclear, but it could have something to do with the fact that this is still a company that lost more than $13 million in the first quarter on $31 million in revenue. Growth is good, but at some point investors like to see profitability, too.
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