Angi's Lowered Growth Guidance Confirms Persistent Revenue Woes, Stock Plunges 23%

What happened

Angi's shares fell 23% after management downgraded FY26 growth expectations, revealing that demand pressures are more severe than anticipated despite a shift to proprietary channels. This aligns with the deep report's observation of structural revenue declines, with Q3 2025 revenue down 10% year-over-year and network volumes collapsing by over 80%. Management now plans to significantly increase marketing spend to drive proprietary growth, while a recent restructuring aims to cut $70-80 million in annual expenses through layoffs and efficiency gains. However, the deep report cautions that proprietary growth, though improving, has not yet offset overall revenue drops, and free cash flow remains a concern with $500 million in debt maturing in 2028. Critically, the guidance cut undermines the base-case scenario for a 2026 revenue stabilization, raising execution risks and suggesting the turnaround is faltering.

Implication

The 23% stock drop signals a loss of market confidence in Angi's near-term recovery, increasing the probability of the bear case where revenue keeps falling and free cash flow weakens. Management's aggressive marketing spend, if ineffective, could erode margins further, challenging the narrative of AI-driven efficiencies offsetting costs. While restructuring savings may provide some relief, they are unlikely to compensate if proprietary growth stalls, necessitating close watch on Q4 2025 and 2026 results for revenue trends. This development underscores the deep report's warning that Angi's path to positive growth is narrow, with balance-sheet risks looming if free cash flow deteriorates. Consequently, investors should avoid new capital until clear evidence of revenue inflection and sustained free cash flow emerges, as the wait rating remains prudent.

Thesis delta

The lowered FY26 growth expectations shift the thesis toward a more bearish outlook, reducing confidence in Angi's ability to achieve mid-single-digit revenue growth in 2026 as previously targeted. This aligns with the deep report's bear scenario, where ongoing declines could lead to further downside, emphasizing that the wait stance is now even more critical until revenue stabilization is proven.