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Angie's List shares fall on report of price cuts

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October 3, 2013 12:05 PM EST | AP

NEW YORK — NEW YORK (AP) — Shares of Angie's List Inc. fell Thursday, a day after a newspaper report said the consumer review service is cutting its membership prices.

THE SPARK: The Wall Street Journal reported Wednesday that Angie's List cut its membership prices by 75 percent in New York, Washington, Chicago, San Francisco, Indianapolis and other key markets to attract new members.

Angie's List's CEO told the newspaper that new members are paying $10 for an annual membership, down from around $40.

A representative from Angie's List did not immediately respond to a request for comment.

THE BIG PICTURE: Angie's List is a subscriber service that provides online access to business ratings and reviews. Its members can review services from dentists, doctors, veterinarians, gardeners, plumbers and other businesses.

The company went public in November 2011. It posted a loss during its second quarter, but the loss was narrower than it was a year before.

THE ANALYSIS: Janney Capital Markets Shawn Milne said that the lower-pricing test seems to be over as of Thursday morning, but he said the company may continue to test lower pricing. He expects average revenue from each user to fall 8 percent to $28.79 this year and 5 percent to $27.32 next year.

SHARE ACTION: Down $3.03, or 14.4 percent, to $17.96 in midday trading Thursday. They are up 48 percent since the beginning of the year and are up 38 percent since its initial public offering price of $13.