Indianapolis-based Angie’s List's stock continued to tumble Thursday morning after an analyst downgraded the stock following a report that Internet giant eBay will test its own consumer-reviews site in the United Kingdom.
Shares in Angie's List fell as much as 12 percent before rising slightly. They traded at $23.92 late in the morning, down nearly 10 percent. They closed the day at $23.76, down 10.3 percent from the previous day's close.
Even though the company reported record second-quarter revenue Wednesday, Raymond James lowered its Angie's List outlook to "outperform" from "strong buy."
Meanwhile, Barrington Research said it would maintain its “market perform” rating “because we worry that too much optimism is priced in the stock,” which had been up 120 percent year-to-date through Wednesday.
Barrington also cited uncertainty around a recent change in chief financial officers. Analyst Jeff Houston said he still believes Angie’s business model is sound, and cited a recent change to sales force compensation favorable to the company.
Angie's List on Wednesday said revenue rose to $59.2 million in the quarter ended June 30, a rise of 62 percent over the second quarter of 2012.
The company continued to lose money but the losses are getting smaller. The company lost $14.3 million, or 25 cents per share, compared to a loss of $23.4 million, or 41 cents per share, for the same quarter a year earlier.
The loss of 25 cents a share was in line with a consensus of 12 analysts who follow the publisher of consumer reviews for services such as plumbers and roofers.
Angie's List shares closed Wednesday at $26.50 per share, down 1.3 percent. They fell another 5.7 percent after hours, to $25 per share.
Earlier Wednesday, TechCrunch.com reported that Internet giant eBay was testing a consumer ratings and review service "similar to Angie's List" in the UK known as eBayHire. EBay has not announced a similar pilot in the United States, at least "not yet," the industry trade site said.
Despite spending millions of dollars on national marketing, Angie's List has been facing growing competition in its niche by firms such as Yelp, Thumbtack and HomeAdvisor. Angie’s List, which arguably has more consumer reviews and leading-edge service scheduling via its website, has been perennially unprofitable since its founding in the 1990s. Much of its cash flow has gone to establishing a presence in new cities.
Nationwide, Angie's List marketing expenses grew just 1 percent in the second quarter, to $28 million.
The company reported new highs for paid membership, with nearly 2.2 million at the end of the quarter, an increase of 51 percent from a year earlier. Participating service providers rose 42 percent, to 42,452.