Angie’s List Inc (ANGI) Valuation Discrepancy Still Not Attractive

Google threat

According to CNNMoney, the best part of the new Google Maps is the Explore feature that offers a Yelp-like tool. The tool pulls in all the reviews Google Inc (NASDAQ:GOOG) bought from Zagat as well as those from its own user-generated ratings. The main feature allows users to view the best options around that person based on the reviews in specific categories.

The writer claims that going back to Yelp is painful after using Explore. While possible it seems unlikely that the user bases of Angie’s and Yelp would flee those services for yet another service from Google. The richness of reviews would have to improve greatly to make a switch truly occur.

Bottom line

As Yelp soars to new heights, the valuation discrepancy makes Angie’s worth a second look. As a user of reviews, it still seems unlikely that the general public in smaller metro areas will embrace a subscription model. Angie’s might work well in Los Angeles, but a person in a Middle American town would find it easier to pull up Yelp or use the old fashioned method of asking a friend or neighbor for recommendations. With that limiting factor, it remains difficult to get behind Angie’s even with this valuation discrepancy.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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