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Can You Imagine How Jubilant Yelp's (NYSE:YELP) Shareholders Feel About Its 107% Share Price Gain?

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Simply Wall St
·3 min read
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Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Yelp Inc. (NYSE:YELP) share price had more than doubled in just one year - up 107%. It's also good to see the share price up 24% over the last quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 10% in three years.

See our latest analysis for Yelp

Because Yelp made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last year Yelp saw its revenue shrink by 14%. We're a little surprised to see the share price pop 107% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

Yelp is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Yelp stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

It's good to see that Yelp has rewarded shareholders with a total shareholder return of 107% in the last twelve months. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Yelp , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.