Disappointing Guidance Drives Yelp Stock Lower in May 2017

Yelp stock fell 21% in May 2017

US-based (SPY) online technology (QQQ) company Yelp (YELP) saw its stock fall 21% in May 2017 after it provided weak guidance for fiscal 2017. On May 9, 2017, Yelp announced its 1Q17 results, and its revenues rose 24% YoY (year-over-year) to $197.3 million.

Yelp’s non-GAAP[1. generally accepted accounting principles] net income rose 170% YoY to $16.3 million with EPS (earnings per share) of $0.19. Yelp’s advertising accounts rose 18% YoY to 143,000, and its paying advertising accounts rose 17% YoY to 139,000. Yelp’s 1Q17 advertising revenues rose 24% YoY to $177 million.

Disappointing Guidance Drives Yelp Stock Lower in May 2017

In April 2017, Yelp acquired Wi-Fi marketing company Turnstyle Analytics for $20 million in cash. Similar to Groupon, Yelp has also exited business operations from outside the United States and is focusing on growth in North America.

Revenues below analyst estimates

For fiscal 2017, Yelp (YELP) expects revenues between $850 million–$865 million, lower than its previous guidance between $880 million–$900 million. Its stock fell almost 20% in the week ended May 12, 2017.

Yelp expects revenues between $202 million–$206 million in 2Q17, compared to the earlier analyst estimate of more than $215 million.

Yelp reported a problem it faced in 1Q17 in which small businesses had trouble competing with large brands for advertising spots on its site through its ad placement system.