AMZN’s Next Victim: Angie’s List (ANGI)

Advertisement

Let’s call it like it is: Amazon.com, Inc. (NASDAQ:AMZN) is a killer. Amazon has puthousehold names out of business in a matter of years. Borders. Circuit City. RadioShack Corporation (OTCMKTS:RSHCQ). But it’s not done yet.

AMZN Next Victim Angie's List inc ANGI stockThe next victim on AMZN’s kick-the-bucket list is home services company Angie’s List Inc (NASDAQ:ANGI).

All poor ol’ Angie needs is a little shove, and Amazon is more than happy to oblige. ANGI stock is down 48% in the last year, and the company has not posted a profitable fiscal year since its 2011 IPO.

AMZN, meanwhile, admittedly has some profitability problems of its own. Its erratic earnings performance in 2014 caused the stock to crater nearly 30% from its highs, selling off from more than $400 per share to $284 per share in the wake of the uncertainty.

But after reporting a blowout quarter for earnings in late January, AMZN is back — and it’s out for blood.

This Could Get Ugly

This isn’t mere speculation. AMZN launched a service on Monday that competes directly with ANGI, according to a Reuters report. Amazon will cull a list of service professionals that can perform around 700 different services, endorsing each one with an Amazon guarantee.

Worried about getting ripped off? AMZN has that covered, too. The company runs background checks against the providers it endorses, and offers a 30-day price-matching guarantee.

To be fair, ANGI isn’t the only stock threatened by Amazon’s ambitious move. Companies like Home Depot Inc (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW) and online review site Yelp Inc (NYSE:YELP) are also under pressure. Home Depot and Lowe’s have both taken steps in recent years to improve their business model and take a cut as the middleman between service providers and consumers.

When you think about it, home improvement stores are in a pretty darn good position to do that.

But Angie’s List is the only one of those companies with a sole focus on professional services, and its lack of diversification makes the ANGI stock price even more prone to a meltdown than usual. Analysts at Wunderlich Securities tend to agree, scaling back the price target on ANGI stock from $8 per share to $6 per share, a 25% haircut.

Wunderlich worries that Amazon’s built-in network of 85 million customers and partners makes the e-commerce titan a worrisome foe for ANGI, particularly if AMZN bundles its Home Services offerings into the already-enticing $99 annual Prime subscription.

ANGI has been a poor stock for a long time. But this unprofitable company hasn’t hit bottom yet. Get out of this dog before it bites you again — because the next one will leave a mark!

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/03/amzn-next-victim-angies-list-angi-stock/.

©2024 InvestorPlace Media, LLC