The shares of Angie’s List Inc (NASDAQ:ANGI) rose 19.15% after the news of a potential sale of the online company. The shares skyrocketed after news from the Financial Times that the company has hired bankers to map out strategic options including the possibility of a sale.
As mentioned by the Financial Times, ANGI’s had conversations with its potential buyers, although the newspaper said that online company “is not wedded to selling itself” and might even avoid sale at the moment. As a response to the market speculation, Angie’s List Inc (NASDAQ:ANGI)’s spokeswoman said that the company do not respond to “rumors” denying further comments.
As of now, the company has around 2.8 million users accessing its premium review service and the company raises nearly 10% of its revenue from e-commerce sales. However, the current working model has huge marketing expenses pulling the gross margins down mixed with flat renewal rate in the past few years.
According to the expert opinion, Amazon.com, Inc. (NASDAQ:AMZN), Google Inc (NASDAQ:GOOG), The Home Depot, Inc. (NYSE:HD) are among the primary buyers of Angie’s List Inc (NASDAQ:ANGI). Each of these companies is likely to shift paid reviews to the free content category, hence helping to cut down marketing expenses and improve online sales, as said by Darren Aftahi, Northland Securities.
Angie’s List Inc (NASDAQ:ANGI) announced revenue of $78.9 million for its second quarter 2014 with service provider segment contributing $60.4 million in the quarter. The company spent $8.0 million under its marketing expenses for the quarter. The quarter ended with net loss of $18.4 million and addition of 399,000 to its gross members’ list. ANGI reported 2,838,863 total paid members at the end of the second quarter.
This article has been written by Prakash Pandey.