What Happened:
Shares of home services online marketplace ANGI (NASDAQ: ANGI) jumped 5.94% in the after-market session after activist investor TCS Capital, which built more than a 4% stake in Yelp, proposed a merger between Angi and Yelp. TCS argued that such a deal would create a dominant player in the lucrative home services market and generate meaningful revenue and cost synergies. TCS Capital also suggested that Yelp could attract interest from other potential suitors, such as strategic or private equity buyers that could benefit from its rich data and local ad network. After the initial pop the shares cooled down to $3.33, up 4.06% from previous close.
What is the market telling us:
Angi's shares are quite volatile and over the last year have had 64 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 14 days ago, when the stock gained 8.43% on the news that the company reported first quarter results that exceeded analysts' revenue, adjusted EBITDA, and earnings per share (EPS) estimates. The company generated positive free cash flow after several quarters of cash burn. However, there was a decline in users and the revenue growth was somewhat weak. For the full year, the company guided adj. EBITDA ahead of Consensus. While it wasn't a perfect quarter, it was certainly a good one, with the improved profit outlook a major positive for the market's perception of the business.
Angi is up 34.3% since the beginning of the year, but at $3.33 per share it is still trading 45.8% below its 52-week high of $6.14 from August 2022. Investors who bought $1,000 worth of Angi's shares 5 years ago would now be looking at an investment worth $218.79.
Is now the time to buy Angi? Access our full analysis of the earnings results here, it's free.