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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At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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