Why Angie's List Shares Surged

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 consumer-review website Angie's List (NAS: ANGI) soared 25% today after its quarterly results topped Wall Street estimates.

So what: Angie's List shares have been crushed in recent months on wider-than-expected losses, but today's third-quarter results -- EPS loss of $0.32 on revenue of $42 million versus the consensus loss of $0.34 and revenue of $41 million -- coupled with decent guidance suggests that the company is gaining traction. While hefty advertising costs continue to weigh heavily on the bottom line, a 68% year-over-year jump in total paid memberships is reigniting optimism over its potential long-termprofitability.

Now what: Management now sees fourth-quarter revenue of $45 million to $46 million, in line with Wall Street's estimate of $45.6 million. "First year advertising revenue originations have grown 106% year-over-year. In addition, service provider revenue renewal rate remained over 100%," CEO Bill Oesterle said. "This dynamic should contribute significant additional margin in the coming quarters." Given the young company's still-highly speculative nature, however, I'd remain cautious about buying into that bull talk.

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

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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