Why Angie's List Shares Got Clipped

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 review-based website Angie's List (NAS: ANGI) were looking for a fix today, falling as much as 19% on what appeared to be a tandem play after Groupon's (NAS: GRPN) earnings report came up short.

So what: Social media stocks were down across the board as Facebook (NAS: FB) dropped 4% and Yelp (NYS: YELP) fell 5%, while Groupon got hit the hardest with a 25% drop. Investors were particularly concerned with Groupon's slowing growth, which could signal general saturation on social media platforms. Still in the red after nearly 20 years, Angie's List is particularly susceptible to these concerns as it will need to grow its top line appreciably if it hopes to turn a profit. The company posted a disappointing earnings report of its own last week as net income dropped 44% to -$23.4 million for the quarter.

Now what: Of the recent social media stock IPOs, Angie's List is the worst in my opinion. The company is still a money pit after nearly two decades in business, and seems particularly vulnerable to Yelp, which offers free access as opposed to Angie's List's subscription-based model, and should therefore generate more content from its users.

If there's ever been a stock shouting "RUN" at investors, this is it.

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The article Why Angie's List Shares Got Clipped originally appeared on Fool.com.

Fool contributorJeremy Bowmanholds no positions in the companies above. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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