I am not a professional short but after experiencing Angie's list I felt compelled to go short. There are so many warning signs I could get finger cramps expressing them all. The first warning sign floored me. I called up to enroll and carefully asked the questions I normally ask. I learned that I did not have the option of enrolling for only one year. I could only enroll with automatic annual renewal. I asked if I could enroll for a year and give notice of non renewal immediately upon enrolling. I was informed that the only option would be to give notice of non renewal at the appropriate time, at the end of the year. I smelled a rat, a big big rat. How could a consumer protecting company have such a draonian and predatory policy? From business experience there was one apparent answer that I concluded explained the situation. Subscription type businesses like rental companies or alarm monitoring companies have trouble selling themselves for good valuation unless the customers are on contract. This Angie policy was the closest they could accomplish to a contract. I now conclude that the companies only hope and I percieve little hope for Angie's was to sell itself. Stock market people love predatory anti consumer practices, so why should the one I am mentioning be a concern?
Because that kind of practice is obvious to consumers.
So I finished my enrollment in Angies list to try it. I called one vendor and the result was mediocre and cancelled my subscription. Then Angies gives their MO away again. They send me a special offer ( to a non member) that was a 70% discount on a service that I consider garbage and a ticket to get exploited. And I am not even a member. Lets go further. Angie's does not seem to have any super stars. As I see it management has succeeded beyond their wildest dreams. The energy and expertise and outstanding management that Angie's would need to survive doing what they do on a national level is unlikely to be there. Angie's is a tough challenge for management. In my opinion the door is the friendiest horizon the Angie people are thinking about. I expect they would become so excited if an opportunity to sell shares arose they would begin to have experiences in their pants.
Imagine what will happen if Angie forgets to guard its mailing list with the high end subscribers.
I do want to concede there is one reason not to short Angie's list. Why. You cant get shares to short. At least not at my broker.
I'm short and or a holder of derivatives in Angie's and my opinions may not be objective. I think Angie herself would do well in the Pizza business. Angie's literature states that Angie is quite a go getter and I think Pizza would be a really good match.
Very good post imo.You have pointed out as a user how unsustainable the business model is. The cash burn is crazy bad and while management had an idea and could maket well enough to get a public offering there is no way this model can work with the team they have over an extended market place. It is easy enough to assemble the list but very difficult to vet it for reliability, performance and cost metrics. as it stands currently I believe the continued sell off will accelerate. Tough market and the weak will get weaker. The average person who needs services ask friends for references and checks the local BBB. A far better assurance. There are also age old but still used Yellow pages. The YELP model is superior to Angi as an experience imo and is free.By the way you can use derivatives to short but I can borrow more shares today so someone is not really looking into this for you properly. Is it a discount Broker ? It may have to do with your account size and some of the deep discounters really do not like short sales. Selling a naked call of a Bear put or Bear call can also work as you know but I would not spread here as it is a waste to buy protection as the premium is low. better to just buy it back if the trade turns against you. This thing is worth about 0.96 a share. I will probably cover before it hits that but not for quite awhile.Good luck. You may not be a pro on shorting but your instincts are good on this one imho.