Tuesday, October 22, 2013

Angie's List (ANGI) Vol Hits All-time Highs; Earnings May Signal Solvency Issues; Will the Company Make it?

ANGI is trading $15.38, up 0.13% with IV30™ down 0.9%. The LIVEVOL® Pro Summary is below.


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Angie’s List, Inc. (Angie’s List) operates a consumer-driven service for members to research, hire, rate and review local professionals for critical needs, such as home, health care and automotive services.

I found this stock using a real-time custom scan. This one hunts for elevated vols. ANGI has earnings due out tomorrow AMC, so now is the time to examine the volatility, and of course, it should be elevated into the earnings event.

Custom Scan Details
Stock Price GTE $5
IV30™ GTE 30
IV30™ Percentile GTE 80
Average Option Volume GTE 1,200

The two-year ANGI Charts Tab is included (below). The top portion is the stock price; the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

On the stock side we can see a number of stock gaps over the last year (highlighted in yellow). Many of those stock moves are due to earnings releases (the blue “E” icon represents earnings). But, the most recent move down from $23.89 (9-27-2013) to today’s price of ~$15 was not explicitly due to an earnings release yet it has seen the stock lose nearly 50% of its value in less than a month. Yikes…

So what was the news?... It was actually quite big – ANGI has cut their membership prices by 75% (from $40 per year to $10 per year). The stock market didn’t like that… And now we have earnings due out which means more information, more speak from top management and more questions from top tier analysts. Let’s turn to the ~all-time IV30™ chart for ANGI in isolation, below,

We can see the IV30™ is essentially at an all-time high. We can also see remarkable spike up from the bad news combined with the approaching earnings release. The IV30™ climbed from 57.65% (9-27-2013) to now just under 100%. So as the stock has fallen by ~40%, the IV30™ has risen by ~80%. And earnings, they are here after market close (AMC) on Wednesday 10-23-2013…

Finally, let's look to the Options Tab (below).

Across the top we can see the monthly vols are priced to 101.95% for Nov and 81.59% for Dec. That vol diff is due to the earnings release. A fair question is, considering the firm hasn’t turned an annual profit yet, could the earnings news also be a test of solvency for the firm as a going concern? I guess we’ll see…

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