Angie’s List Inc. (NASDAQ:ANGI) is in trouble financially, seen by sale reports making waves in Wall Street after a dismal year of performance in the review business. CNBC’s analyst, Jim Cramer, has already reiterated that a sale option remains the only viable option for the ailing company.
Cramer also maintains that eBay Inc. (NASDAQ:EBAY)’s push to Divest PayPal would not bear fruit in terms of profits as competition continues to creep in from mobile payment systems
“We will see if Angie’s List Inc. (NASDAQ:ANGI) can find any real suitor, but the key is that when the company floated the idea of a sale that I proposed. Its stock, which had been on a free fall went through the roof,” said Mr. Cramer.
Reports are already circulating that Angie List has hired a number of investment banks who will foresee the sale process to ensure maximum return is achieved in any deal. Angie’s List Inc. (NASDAQ:ANGI) profit margins have been affected by other free deals offered by Google Inc. (NASDAQ:GOOGL) and Yelp Inc. (NYSE:YELP). Annual membership fee has reportedly shrunk to a low of $12 from high of $36 a decade ago.
The company is also grappling with trust issues with critics arguing that most of its revenues come from providers who are paying for advertising on its site rather than the core business.
eBay Inc. (NASDAQ:EBAY) push to keep pace with the fast growing e-commerce industry through a spinoff of PayPal may not work to the latter’s advantage, if Cramer sentiments are to be believed. Cramer argues that with the emergence of mobile payment system, PayPal may struggle to cope with competition in the near future
“Without more and better partnerships I think PayPal’s growth could be crimped by all the new competition in the mobile payment space especially from Apple,” said Mr. Cramer.
PayPal’s biggest test will come from Apple Inc. (NASDAQ:AAPL), when ‘Apple Pay’ service is officially launched. PayPal will have to devise a formula of competing against millions of iPhone users who might be trapped by the new service.
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