Yelp shares tank on scathing re­views for com­pany’s re­sults

Stock plunges more than 26 per­cent after a neg­a­tive sales re­port, fore­cast

The Mercury News - - Business + Technology - By Rex Crum rcrum@ ba­yare­anews­group.com by Yelp’s cus­tomers. Yelp said that dur­ing its third quar­ter it earned 17 cents a share, which topped an­a­lysts’ fore­casts for a profit of 10 cents a share, but its sales of $241 mil­lion failed to meet Wall Street’s

The re­views are in, and they are giv­ing zero stars to Yelp.

The San Fran­cisco-based on­line re­view and rec­om­men­da­tion com­pany watched its shares plum­met more than 26 per­cent Fri­day, to close at $31.93, fol­low­ing what could only be called a dis­ap­point­ing quar­terly earn­ings re­port and out­look. Late Thurs­day, Yelp said that it added no net new ad­ver­tis­ing cus­tomers dur­ing its third quar­ter, as the com­pany saw the ef­fects of a change in the kinds of con­tracts it of­fers.

UBS an­a­lyst Eric Sheri­dan said in a re­search re­port that Yelp’s re­sults show “key de­bates on (its) busi­ness tran­si­tion and (man­age­ment) ex­e­cu­tion” are likely to come to the fore­front of in­vestors’ con­cerns about where Yelp stands in the mar­ket for lo­cal-based on­line ad­ver­tis­ing, in par­tic­u­lar. “Un­like last quar­ter, which hit all the up­side high points in the tran­si­tion, we think in­vestors now will place Yelp squarely back into the ‘show me’ camp,” Sheri­dan said. Sheri­dan, who has a sell rat­ing on Yelp’s stock, slashed his price tar­get on the com­pany’s shares to $28 from $39.

Ear­lier this year, Yelp switched to of­fer­ing lo­cal ad­ver­tis­ers con­tracts with­out any set term lengths from its prior method of sign­ing up cus­tomers to long-term ad deals. The switch re­sulted in a high rate of can­celled con­tracts

KARL MONDON — STAFF PHO­TOG­RA­PHER

Yelp said that dur­ing its third quar­ter it earned 17cents a share, which topped an­a­lysts’ fore­casts for a profit of 10 cents a share, but its sales failed to meet ex­pec­ta­tions.

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