Not going back up and through the 50dma...Not a good sign...A last gasp before it falls through the 100dma and back down to the 150dma...Look at the chart...Downward channel couldn't be anymore clear...
I like that this is the 3rd day in a row that is hasn't gone up through the 50dma...It has been fighting the down tape most days though in the last week so looking for a two-day down draft like Wednesday's big drop to give it a big kick back down the ladder...I'd like to see it break back through the 100dma though to give it some dead air to fall through.
Now they have a brand new way to spend even more money and pushing them further away from becoming profitable in this decade!
Well I'm guessing if it holds form than it will go lower than 58 to make a new lower low...The 100dma seemed to be the bottom last week...Hoping it can break through it this time and maybe drop to 55ish for a new bottom...Santa Claus will kick in at some point but still feel S&P wants to go down to 1760 or even test 1750 before a year end bounce.
da_driz...What's your take on it bouncing off the 100dma last week and if that is a floor for the stock right now or if your charting sees it as something Yelp breaks through and then the 150dma becomes the next support level down at $51-$52ish...? Thanks.
In our previous note, we looked at the factors that will drive revenue growth at Yelp (YELP). To recap, we are encouraged by the growth in Yelp’s business and have substantially increased our forecast for the number of active business accounts that Yelp can target, the number of unique visitors, as well as the revenues from deal businesses. Additionally, we believe that launch of advertising on a mobile platform will fuel the growth of the brand advertising division for the company as well. Despite the upgrade, our stock price estimate stands 30% below the current market price, which has more than tripled over the past year. In this article, we will discuss the factors that can negatively impact Yelp’s stock price in the future.
Factors That Can Drag The Stock Price
Operating Expenses A Concern- The current market price implies a much higher growth than we presently forecast. However, the single most important factor that drives Yelp’s value after its revenue growth is the growth in its operating expenses. Yelp has had to incur high operating expenses to fuel its rapid expansion. Yelp’s operating expenses accounted for almost $170 million, 104% its overall revenues, in the first nine months of 2013. While the SG&A expense accounts for 76%, R&D expense accounts for 16% of the revenues. We expect SG&A costs to decline to around 43% of its revenue by the end of the forecast period. However, Yelp’s planned expansion spree can lead to an increase in SG&A expense as it will have to increase its marketing and operational costs to sustain the growth in new markets. If Yelp’s expenses were to increase by a lot more than what we currently expect, this would negatively impact the stock’s value meaningfully.
Expansion Plans To Weigh on Average Revenue Per Active Business- Average revenue per active local business (ARPALB) is one of the most important drivers in our valuation for Yelp’s locals ads business. According to Yelp, monetization rate of a city or region increases with time. While ARPALB was at $3,800 for regions where Yelp started offering services in 2005, it was $950 for regions where Yelp services started in 2010.  As Yelp introduces its services in new regions, we expect that this trend will negatively impact average revenue. Additionally, as Yelp expands internationally, the average revenue will decline further as local businesses in these markets tend to spend less on ads compared to their counter parts in the U.S. We expect average revenue for Yelp to decline from $2,730 in 2012 to $2,550 by the end of our forecast period.
Competition Can Challenge Yelp’s Growth- Our forecast is based on the assumption that Yelp will see reasonable success across its business lines and will be able to attract users in the new markets it enters. Although Yelp has first mover advantage in social local review services, other Internet giants can leverage their data, experience and money to launch similar services in the future. Companies such as Google (GOOG) and Yahoo (YHOO) have competing services such as Google Places and Yahoo! Local. There’s always the risk that these companies can expand and leverage their existing base to compete with Yelp. If this were to materialize, Yelp’s revenue growth can slowdown. This could hurt the stock as the high price to sales-per-share ratio (a bit over 20x) suggests that the market is mainly pricing Yelps’s stock on high expected revenue growth. The P/E ratio is less meaningful as the company is only now generating positive EPS.
Our price estimate for Yelp stands at $44.44, which is 30% below its current the market price. We invite the reader to adjust the model and create his or her own alternative valuation.
"Perhaps that's why CEO Mark Zuckerberg is nudging people toward public conversations." This will keep working it's way to FB offering more and more ways people can rate businesses and share this info with their friends and have the businesses see all this...It WILL take share from Yelp.
From a CNET article
PARIS -- People who use Facebook to grouse about an unpleasant flight or rave about the latest TV episode might soon expect to hear back from the airline or the TV network.
For companies that produce entertainment content or that have brands to promote, the conversations people have about them on Facebook are invisible, said business development vice president Chris Daniels said at the LeWeb conference here. Now the company is working to give brands and media companies a better way find those conversations so they can engage.
"We know people are talking about TV, movies, and media on Facebook. We know it's happening on Facebook more than anywhere else. We just need to surface that more," Daniels said.
That might be harder than on Twitter, where so much conversation is very public and therefore more easily searched. But Daniels said Facebook's changes to be more competitive there are successful. "That's what we're doing, and it's working," he said.
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The approach involves application programming interfaces (APIs) introduced in recent weeks that "allow brands, media companies, and content owners to see what people are talking about on Facebook," he said. That, in turn could make it possible to engage better.
It's not clear how well that will sit with Facebook users, though. An airline elbowing in on private Facebook communications could be very intrusive. Perhaps that's why CEO Mark Zuckerberg is nudging people toward public conversations.
Daniels is happy with apps that tie into Facebook -- fitness apps that let people compete and music apps that let people share music their friends and family listen to. But he thinks commerce is weak for social apps today.
"I haven't seen the perfect user experience that captures what I believe social commerce can be -- and I do believe commerce is naturally social," Daniels said. That'll change, though: "Lots of good companies are going after that opportunity."
Looks like it hit the high from back on Nov. 19th and now is back it off it over $2. Every recent downward move started with a $3+ up day the day before it the way the chart looks over the last 7-8 weeks.. Might be a repeat of that starting today....$7-$10 down each time. We shall see.
I just went to the site and this info is from a comment on a short blub about the CEO...IFFF there was any sort of SEC investigation we would have know about it...I'd love for there to be one to help knock this thing down $5 in a day but likely not happening. The statements about insiders selling shares in a big way is the red flag in it all though.
Good job Shelby...I happen to be short and blew it by not getting out around $58 but like you say, there is a down channel going and Yelp keeps making lower highs and lower lows since late Oct. It looks like it went to the 100dma and no lower but is now bumping it's head on the 50dma. I always like to get other people's take on chart reading as I'm decent at it, but I am no true expert at it. Good luck!
da_driz...What does your crystal ball say on the charts as we approach the 50dma? It has popped up through it in the past few months but then falls even farther making a new low...I'm looking for that to happen again...Maybe it doesn't even break through it this time as it's run up off a recent low of $58 within the last two weeks.
$66.21 is the current 50dma...Looks like it will run up near there but that's probably where this $7 run up off the recent low ends and a possible sell off starts...It's only been going up off social media strength...Not it's own positive outlook...Take your profits now.
There will be a class action at some point that will make Yelp throw away more of it's money becoming much less likely to ever become profitable...When sentiment turns on the street...This will be on a sled down hill with no brakes!
These aren't small sales like I want to buy a new house sale...These are huge chunks that will dilute that pool...The elevator is heading down...Up .25 on a DOW 200 day...Yikes!