Yelp Inc. Message Board

  • investora2z investora2z Sep 13, 2013 8:08 AM Flag

    Great run..

    The momentum has taken the stock even higher. The stock has appreciated by 50% after the earnings, and the last month saw it rise by 25%. The earnings surprised the street, and the company is getting really close to making a turnaround over the next few quarters. The analysts had increased their target after the earnings, but all those targets have been exceeded by a huge margin. There are voices advising caution due to stretched valuations. An insidermonkey article has called the valuations insane. The price to sales and price to book is around 23/24 which indicates that a lot of future positives may already be factored in the stock price. So movement from here on is likely to take it beyond reasonable levels. However, an article on seekingalpha is positive on the stock, and the author says that that a large portion of the up move in the stock has come due to positive opinions about Yelp’s ability to continue growing at a high rate, and its ability to monetize its content. The author believes that the stock still has a lot of upside potential, but needs to address relevancy issues about the content it continuously acquires. It needs to use data science to increase relevancy and trust about its content. In fact, not many doubt the potential of the company, but are wary of investing after such a huge run up. Despite the specialization and brand strength of Yelp, competition from players like Google (GOOG) and Yahoo (YHOO) cannot be ignored, and there are other players like IZEA (IZEA) (native advertising, social media sponsorship) which may provide direct and indirect competition in the near future. The momentum can take it higher, but the risk reward ratio may not be so favorable anymore. The next earnings will be a risky event.

 
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