Bankrate's shares have dropped 20% from highs set in the past two weeks with the recent pull back attributable to comments made by CFO Ed DiMaria at the Citigroup conference about the lack of mortgage advertisers on the site.
Mr. DiMaria stated that while Bankrate has seen an increase in traffic due to government efforts to reduce mortgage rates, the increased traffic did not and is not translating into increased mortgage related revenues, given tight credit conditions. In addition, the credit card business faces headwinds in the affiliate channels. I wrote about both of these previously, see articles here and here.
However, he did state that deposit revenues were strong and were offsetting the weak mortgage related revenues and that he expected EBITDA margins to creep back up towards the 40% range (margins had taken a hit due to lower margin business acquisitions and investments). Further, the site redesign is finally expected in 2Q, about a year behind schedule.
The stock remains extremely volatile. I was hoping to short it when/if it reached the low $40s but now will look to buy shares if it drops into the low $20s. Looks like that will be the trading range for the stock over the next six months.
Sunday, January 11, 2009
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