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Ancestry.com (NASDAQ: ACOM) is an Internet information provider that operates a worldwide subscription-based online family history resource for subscribers. Thursday, the company's stock price tanked 16.44% to close at $23.83. That was the worst ever intraday loss for Ancestry.com and was coupled with unusually high volume of over six million shares.
Ancestry.com, formerly known as Generations Network, was founded in 1983 and is headquartered in Provo, Utah. Currently, Ancestry.com has more than 1.7 million paying subscribers. The subscribers use the company's online platform and digital historical record collection to build their family trees, collaborate with other subscribers, and publish and share their stories.
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The reason behind Ancestry.com's fall was decreased investor confidence following the company's 4Q 2011 earnings results, which were released Wednesday. While the company's revenue growth in the past year has been very stable, the improvements have been marginal.
Furthermore, the increase in number of subscribers during the fourth quarter was negligible, especially in light of the company having spent heavily in attempt to attract new customers. The subsequent decrease in revenue and increase in costs, which brought little in real returns, raised concerns for investors.
To make matters worse, Ancestry.com CEO Tim Sullivan said that due to slowdowns in the company's growth - along with a weaker-than-expected response to the NBC show “Who Do You Think You Are?” – Ancestry.com is lowering its expectations for subscriber growth in the first two quarters of 2012.
However, Ancestry.com has several initiatives in the wings that might help to trigger subscriber growth again. One of the most highly anticipated events for the company this year is the expected release of the 1940 U.S. federal census in April, which Ancestry.com will utilize to add roughly 132 million new names to its databases.
Other major plans include tighter integration with Facebook and a DNA service that will help subscribers connect themselves with distant relatives.
Right now, Ancestry.com has a PEG that is marginally above most of its competitors. It also has a decent return on equity of about 16%, which should encourage some investors to keep their faith in the stock.
The short interest for Ancestry.com was at about 8.7% as of Thursday. That is a very high number that indicates that there are a lot of investors out there sitting on short positions who will be looking to cover their positions in near future. That could result in a bounce back for the company's stock price.
Still, given the weakness of Ancestry.com's growth as of late, perhaps a wait and see approach seems more relevant from an investment perspective.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.