Angie's List's Share Price Down Sharply In After Hours Trading As Losses Mount

Angie's List has been in business for nearly two decades but has never turned a profit. Second quarter earnings reported by the company at the close of the stock market today didn't disappoint the company's many skeptics. Despite a 33% increase in revenues over the same period a year ago, the company reported losses of $18.4 million for the quarter, up from $14.3 million from the prior period last year. That's a larger than expected loss at the same time its second quarter revenues of $78.9 million was lower than expected. Net losses for the year topped $22 million, almost exactly where the company's losses stood at this point last year. The company's stock was trading down nearly 15% an hour after the markets closed, trading well below $9 a share.

Perhaps the most disturbing trend in the numbers is Angie's List's growing reliance on its revenues from service providers. Service provider revenues are growing faster than revenues from memberships sold to consumers who supposedly rate those service providers. Angie's List now relies on 77% of its revenues from service providers. In addition, its marketing costs continue to soar. The cost of signing up a new member increased from $80 a year ago to $90 for the most recent quarter according to Seeking Alpha's David Trainer. "These two numbers reinforce the fact that ANGI, which markets itself as a 'consumer driven organization' is actually beholden to service providers, and consumers recognize that fact," Trainer notes in questioning the reliability of its ratings.