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Would You Regret Selling Yelp?

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Aug. 18 2020, Updated 9:23 a.m. ET

Moving averages

Yelp (YELP) was trading ~5.5% above its 100-day moving average on May 2. In comparison, Groupon (GRPN) was trading ~7.8% below its 100-day moving average, and Amazon (AMZN) was trading ~12.1% above its 100-day moving average on the same date. 

Snap (SNAP) and Alibaba (BABA) were trading 31.1% and 0.9% below their 100-day moving averages, respectively, on the date.

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Analysts’ recommendations

Of the 31 analysts covering Yelp, 14 have given it “buy” recommendations, three have recommended “sells,” and 14 have recommended “holds” on the stock. Analysts’ stock price target for the company is $47.30, and the median price target for the stock is $49. Baidu is trading at a discount of 7.4% to its median target.

Shareholder returns

On May 2 Yelp stock had generated a return of ~26.1% in the trailing-12-month period compared to ~11.5% in the trailing-one-month period. However, it had risen ~3.5% in the trailing-five-day period.

In comparison, Groupon, Amazon, Snap, and Alibaba, Yelp’s peers in the Internet software and services space, had generated returns of 15.3%, 53.7%, -49.8%, and 65.8%, respectively, in the trailing-12-month period.

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Understanding Yelp’s earnings and sales

The EPS (earnings per share) of $1.9 that Yelp posted last stemmed from total revenue of $847 million. Its revenue was up 19% in 2017. For 2018, its revenue is expected to be $1.1 billion, and its EPS are expected to be $0.24.

A look at Yelp’s EBITDA numbers

Yelp’s EBITDA fell 14% to $56.2 million last year. Analysts expect the company to post EBITDA of $183.1 million this year.

Yelp’s shares are changing hands at price-to-EBITDA of 67.5x.

Bolinger Band

In the trading session on May 2, Yelp’s stock price closed at $45.38, near its upper Bolinger Band of $46, implying that it’s overbought.

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