Contractors who use Angie’s List may not realize it but the company has been on a bit of a wild ride lately. Most recently, Angie’s List rolled out a new service offering even as it turned down a second buyout offer. And market experts say more bumpy roads may be in store for what they see as an under-performing brand.
Just days after Angie’s List announced a new lead generation service, it received a $512 million cash offer, or $8.75 per share, from IAC/InteractiveCorp., which owns competitor, HomeAdvisor.
But Angie’s List turned the offer down. “We continue to believe that there is significant value embedded in the company…” said Angie’s List CEO Scott Durchslag in a letter to IAC. This is the second offer from IAC, which originally offered $8.50 per share. Market watchers don’t rule out a third offer in the coming months.
While Angie’s List boasts more than three million paying members, the company has seen its stock value plummet from $15.80 when it went public in 2011 to $10.30 as of Nov. 19, though it was as low as $6.37 in early October, according to TheStreet.
Meanwhile, Angie’s List finds itself in an increasingly crowded online home services marketplace as Google and Amazon join upstarts such as Thumbtack, TaskRabbit and Porch.
Angie’s List hopes to flex its muscles with a new offering that aims to connect contractors with people who visit the site, but aren’t paying members. The company says more than 100 million visitors annually search the site for contractors and more than 85 percent of those aren’t members.
The company’s new service, LeadFeed, aims to connect this group with contractors. It works like this: When nonpaying members visit the site, they will receive a message asking them to provide details of the services they’re looking for. Angie’s List will then send those details to contractors who can reach out to these consumers. The service will cover about 25 categories including plumbing, painting, HVAC, remodeling and electrical.
“This is a huge opportunity for our service providers,” said Durchslag.
But that opportunity will come at a cost. Contactors will have to pay from $7 to $100 per lead, depending on the category and the project. They’ll also have to pay the platform fee of $499 per year or $49.99 per month. A background check is required as well, according to the company.
While the leads may not be as solid as those from paying Angie’s members, Durchslag said they will still be “pretty good.” He added that the service gives contractors, who may not have a solid online reputation yet, an entry into the market. “It opens up a big set of service providers that traditionally haven’t been the top rated or have a whole big base of reviews,” he said.
Still, some market analysts worry that the company’s real problem is its paid model, which costs consumers about $30 a year. “Consumers don’t really like to pay for such services, which is why services provided by companies like Yelp and TripAdvisor are free to access,” wrote Ayush Singh on the InvestorGuide.com. “While the subscription is cheap, I don’t think consumers will continue to pay for the service in the long-run.”
The bigger concern for contractors may be the continuing volatility of Angie’s List, said John Gorman, president of the Save Energy Company. “We haven't been a big proponent of Angie's List for a while,” Gorman said. “I think in general contractors like their vendors to stay the same or consistent. But who knows how this could have changed things or will change things should it go through on a possible third bid.”