Are New Internet Players Destroying This Company?

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Companies such as Tree.com (NASDAQ:TREE), Zillow (NASDAQ:Z) and Trulia (NYSE:TRLA) all provide similar services in some capacity. As the chart below shows, Bankrate was already underperforming competitors before the quarterly results, when looking over the past year.

Screen Shot 2013-02-13 at 11.19.54 AM

On Wednesday, shares of Bankrate fell even further by plunging more than 19 percent to reach a fresh 52-week low below $10. In comparison, Bankrate has a 52-week high of nearly $26. The company approved a $70 million share repurchase program, but it is obviously failing to alleviate concerns. Interestingly, shares of Trulia and Zillow spiked more than 26 percent and 9 percent, respectively.

While it certainly appears that competitors are attracting investors away from Bankrate, there are also fundamental concerns about the future. Looking forward, Bankrate expects revenue to be flat for 2013, against $457.2 million in revenue last year. On average, analysts were expecting revenue of nearly $500 million in 2013.

Trying to remain upbeat about the situation, Thomas R. Evans, president and chief executive officer, says the recent dismal fourth quarter should serve as a bottom. He explains, “In insurance, the strategic transition to higher quality, high-margin leads is moving even more aggressively forward, and with our deep cuts of poor performing traffic behind us in Q4, is now on-track in many of our key criteria, such as agent sign ups and retention. That’s why we see Q4 as the bottoming out of that transition curve that we’ve discussed in the last two quarters. Encouragingly, in credit cards, we’re beginning to see the increased marketing activity across our portfolio of card issuers after a period of marketplace caution.”

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