Yelp…..Yep, Better Luck Next Time
Yelp Inc. operates a platform that connects people with local businesses in the United States, Canada, and internationally. The company's platform covers various local business categories, including restaurants, shopping, beauty and fitness, arts, entertainment and events, home and local services, health, nightlife, travel and hotel, auto, and others. It provides free and paid advertising products to businesses, as well as enables businesses to deliver targeted search advertising to local audiences through its Website and mobile application; and business listing products.
The online review website’s stock was down almost a third on Friday, after it posted third-quarter sales of $241 million, compared with the Wall Street average estimate of $260 million. If there is any bright spots, earnings of 17 cents a share did beat estimates for 10 cents.
The miss was larger due to a change they made in not having advertisers locked into a fixed commitment.
"Although we achieved our adjusted EBITDA outlook for the third quarter, revenue was lower than we anticipated," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer in a press release. "While the shift to non-term advertising has opened our sales funnel, it has also made our results more sensitive to short-term operational issues."
"We remain positive about the move to more flexible and dynamic advertising terms, as we believe the shift greatly increases our long-term sales opportunity and opens up additional levers to expand Yelp's sales reach and profit margins," Stoppelman said.
I like Yelp, I don’t use it much, but when I have used it, Yelp helped me find local places to eat in areas that were foreign to me. Yelp has carved a nice niche in a Google dominated environment, so I have to give them their recognition. But the stock is down X% year to date, so is this a buying opportunity or would you be catching a falling knife? Lets go to the charts to find out.
On the monthly chart price decisive broke the ascending triangle with earnings miss.
Deciding on whether the trend is down or up is a bit deceiving on this one.
But because price only broke one pivot low, the trend is now sideways, so the only trade set up is to play the extremes.
Although price is pulling back, the level highlighted in yellow isn't real demand, so the chart suggest price can fall lower.
The chart also suggest that the level to short price is at the daily supply at the $48 level.
There is no trade set-up at the moment. Since price is in the middle of the weekly supply and demand zones, even placing an iron condor would be a bad idea as am sure the volatility collapse right after earning, so there isn't much premium. Thus, at this time, it's best to look else where for opportunities.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
I wouldn't touch this stock fundamentally because they are losing advertising revenue.
Agree, advertising revenue needs to stabilize, then grow again.