(NASDAQ:ANGI): On its best day, and if the company can defy all history and common sense, it could be worth $6 a share. If you don’t believe Citron, take it from Goldman Sachs and Deutche Bank.
Angie’s List is the most ridiculous, stupid, misunderstood, negligent, nonsensical,
outdated, irresponsible business model in the new web economy. Citron will show the obvious fatal flaws that Wall Street has overlooked, as the analysts cheer lead for a company whose only accomplishment is losing less money than they predicted. New economies give rise to disruptive businesses that are commonly overvalued by the market due to their potential; rarely do they give us a 15-year-old business model that couldn’t make it past a first year business school presentation.
In Part 1 of this expose, we will discuss the structural premise of Angie’s business model
that renders it terminal, and cannot be ignored by investors. This business model is so obviously flawed and inferior to their competition that we believe it is a story in itself.Part 2 will examine in detail the accounting shenanigans played by Angie's List to create the illusion of
“losing less money” than expected. All of the metrics that support a growth story
in Angie’s are skewed to deceive; we will prove that in part 2.Established in 1995, Angie’s List has since has accumulated a deficit of $219 million,while insiders have enriched themselves by selling over $135 million worth of stock since its 2011 IPO debut. All of this is predicated on a business model that does notwork, whose revenue is overly dependent on a large phone room, does not and cannot grow virally, and makes zero logical sense.In a bull market, it seems that analysts look at a stock price first, then reverse-engineer a thesis, no matter how preposterous, to explain and justify its valuation.