Too funny - stock is upgraded to a "buy" from neutral, as they lower their price target to $70 from $82. There's conviction for ya!
Fair enough valentine - and this is what makes a market. The question is, how much of that forward potential performance do you want to pay for now? - you need to risk adjust it ...
Here is how I do it - because they make no profits, you have to assume what their earnings potential is .. because YELP is entering into positive earnings, you can look at their incremental spending and margins to predict the potential for the entire business once they reach their potential. For CY14, incremental EBIT is 9.9%. Take away 35% tax, and you can assume a future YELP has about 6.5% net income potential once they are efficient.
Based on $538M of analyst consensus revenue for 2015, that would be $35M in earnings, or $0.45 per share based on todays share count. Apply a PEG of 1.5 on 43% consensus revenue growth (FWD P/E of 65 on 2015 potential EPS), and you get fair value of $29.
At 7:14am highest bid is 1% below Friday close - and there is a huge reason why YELP doesn't cross 60 heading into earnings - it isn't worth it. The company's fair value based on user/rev growth and margin potential is about $25-$30.
If it gets above $60, it is only on momentum hopes and bigger fool - not company value.
It is unreal how the playbook works over and over again. Same old play, different day. If it plays out, it will float up in Jan, and best bet is to short just prior to earnings for a $50 gain.
The master is back at work pumping the stock - setting up for a large early year Q4 earnings release collapse, just like last year. Publish bogus facts that have no relevance to company performance, get the stock up by building a buzz, and then disappoint when real numbers have to be released.
peny - I have followed the weekly options manipulation in this stock for a long time - and it is severe. about 80% of time the stock moves to max pain on Friday - almost always on the upside. In almost everyone of those large moves up on Friday, there is a reciprical volume dump the following Monday to unload the accumulated Fri position. Then new bets are made on Tues/Wed/Thurs for the next weekly expiration, and game starts again on where it will settle by Friday.
Point is - the movement has nothing to do with fundamentals .. every 3 months there is a shock to game called earnings releases where reality sets in and the stock gets punished for a couple of days, and then game starts again - usually to the upside.
It is a momentum stock - program buys drive the tape for a few weeks, and then it flips based on the numbers. You have to be patient, because when it flips, it will move huge over several weeks. They are all the same: LNKD, Yelp, Twitter, gopro, nflx, etc... the move is always in one direction for a while, then flips. Don't fight the tape.
7.6M shares of down volume on a day the S&P500 is up 2.4%
Key technical, financial and sentiment indicators point to a major fall in the markets starting now and continuing for several months. AMZN will fall below $100 on this move.
You just keep on misleading with bad data - it isn't going to help. AMZN trades at 140x TTM FCF. One of the highest in the S&P. And even FCF is misleading at $1B TTM, as more than $1B of FCF generated is from pushing out payments to suppliers which they have to pay back soon. Hence the $6B in new debt.
Boy - was I right on this or what ... happened less two weeks after my prediction. 4 tranche's of new senior unsecured debt to come.
And unlike the pumping where upgrades and price target increases are based on nothing but a higher stock price, this downgrade of credit by Moody's will actually impact financial performance by raising the cost of debt of Amazon and ultimately result in lower cash flow.
They own over 10% of company, and can't take a down year in AMZN .. pulling out all of the stops with analysts during retail season and preying on low volume days ... Group manipulation trade on AMZN in Q4 is easy way to catch up to index's for the year.
Q4 cash flow should place current ratio just above 1 by end of Q4 from 0.89 today. But, the large neg cash cycle of Q1 (should be about $-3.5B) will overwhelm the $2B line of credit they have, and require them to line up more debt soon.
So, the banks that want the business are out marketing the stock with AMZN to raise demand for the debt - hence the big run.
Except that ALL costs continue to rise as a % of revenue.
Shipping, Fulfillment, Marketing, G&A and Tech&Content. Not some, ALL up over past several years with revenue. That is why the stock is down 20% this year, as there has been no economies of scale even at $100B in revs. This has been the disappointment - it should have happened by now.