Yelp Inc (YELP) Shares Plunge Before Earnings – Why?


While the general market is down big today, one compay that’s struggling quite a bit this morning is Yelp Inc (NYSE:YELP). With fourth quarter earnings expected after the close of the market today, shareholders seem to be in an all-out panic, selling shares, causing the stock to drop to new 52-week lows. In fact shares of Yelp Inc (NYSE:YELP) are getting very close to a new all time low after today’s action.

The stock has struggled immensely over the last two years. Shares once traded over $97 back in early 2014, but competition coming in from the likes of Facebook, and Alphabet have Yelp Inc (NYSE:YELP) investors more than just a little bit worried. With a high PE ratio, and growth plans which are not a certainty, investors are betting that today’s earnings reports will disappoint the market. The stock is down 13.37% or $2.42 following the news, hitting $15.68 per share. Approximately 1.01 million shares traded hands. YELP shares have declined 52.59% since July 2, 2015 and are currently downtrending. It has underperformed the S&P500 by 43.72%.

From a total of 26 analysts covering Yelp (NYSE:YELP) stock, 9 rate it a “Buy”, 4 a “Sell”, and 13 a “Hold”. This means that 35% of the ratings are positive. The highest target price is $50 while the lowest target price is $17.50. The mean of all analyst targets is $30.99 which is 97.64% above today’s ($15.68) stock price. Yelp was the topic of 40 analyst reports since July 28, 2015 according to the firm StockzIntelligence Inc. B. Riley & Co downgraded shares on January 14 to a “Sell” rating. B. Riley & Co maintained shares with a”Neutral” rating and a $21 target share price in their report from an October 29. Guggenheim initiated YELP stock in a recent report from December 21 with a “Neutral” rating. TH Capital initiated the rating on October 28. TH Capital has a “Sell” rating and a $17.50 price target on shares. Finally, Barclays Capital maintained the stock with a “Equal-Weight” rating in a report they issued on an October 29.

The institutional sentiment decreased to 0.63 in Q2 2015. It’s down 0.87, from 1.5 in 2015Q2. The ratio fall, as 90 funds sold all their Yelp Inc shares they owned while 60 reduced their positions. 29 funds bought stakes while 65 increased their total positions. Institutions now own 49.74 million shares which is 17.75% less than the previous share count of 60.47 million in 2015Q2.

Tybourne Capital Management Hk Ltd holds 9.38% of its total portfolio in Yelp Inc, equating to 6.15 million shares. Stonerise Capital Management Llc owns 891,800 shares representing 8.54% of their total US portfolio. Moreover, Dragoneer Investment Group Llc has 6.54% of their total portfolio invested in the company, equating to 767,636 shares. The New York-based Brightfield Capital Management Llc has a total of 5.56% of their portfolio invested in the stock. Kerrisdale Advisers Llc, a New York-based fund reported 739,664 shares owned.

Since March 5, 2015, the stock had 0 buys, and 10 sales for a total of $1.13 million in net activity. Donaker Geoffrey L sold 6,000 shares worth $134,297. Nachman Joseph R sold 385 shares worth $9,123. Wilson Laurence sold 385 shares worth $9,123. Stoppelman Jeremy sold 8,000 shares worth $284,878. The insider Krolik Robert J sold 15,000 shares worth $729,797.

Yelp Inc. connects people with local businesses by bringing ‘word of mouth’ online and providing a platform for businesses and clients to engage and transact. The company has a market cap of $1.08 billion. The Firm provides local business review sites. It has 140.86 P/E ratio. Yelp provides a platform for clients to share their everyday local business experiences, through reviews, tips, photos and videos, and engage directly with businesses, through reviews and its Message the Business feature.