Why Did Shares of Yelp Fall Last Week?



Yelp fell 20% last week

Shares of Yelp (YELP) fell almost 20% in the week ended May 12, 2017, after the company announced its 1Q17 results and provided weak guidance for 2017.

Yelp reported revenue of $197.3 million in 1Q17, a rise of 24% YoY (year-over-year). Yelp had earlier provided revenue guidance of between $195 million and $199 million for 1Q17, compared to analysts’ consensus estimate of $204.4 million. Yelp also posted a GAAP (generally accepted accounting principle) loss of $0.06 per share, compared to analysts’ estimate of -$0.08.

Yelp expects revenue of between $202 million and $206 million for the quarter ending in June 2017, compared to analysts’ earlier estimate of over $215 million. The company expects revenue of between $850 million and $865 million in 2017, below the earlier estimated revenue of between $880 million and $900 million.

Shares of Yelp also fell 7.6% after it reported a disappointing outlook for 1Q17 on February 9, 2017.

Analysts downgrade Yelp

MKM Partners analyst Rob Sanderson downgraded Yelp from a “buy” to a “neutral,” reducing its one-year target price for the company to $27 from $48. RBC Capital’s Mark Mahaney also downgraded the stock and lowered its price target to $27 from $49.

Of the 35 analysts covering Yelp, 14 have given it “buy” recommendations, three have given it “sell” recommendations, and 18 have given it “hold” recommendations. Analysts’ stock price target for the company is $32, and its median target price is $31, which indicates that it’s trading at a discount of 8% to analysts’ median estimate.

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