Shareholder rights law firm Robbins LLP announces that it is investigating the officers and directors of Yelp Inc. (NYSE: YELP) for breaches of fiduciary duties, unjust enrichment, and violations of the Securities Exchange Act of 1934. Yelp operates a platform that connects consumers with local businesses.
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Yelp Inc. (YELP) Shocks Investors by Slashing Revenue Guidance and EBITDA
According to the pending class action lawsuit filed against Yelp, the Company derives substantially all of its revenue from the display of advertising products on its website and mobile app. In fact, advertising revenue accounted for 91% of the Company's 2017 revenue. Throughout 2016 and early 2017, Yelp emphasized a "strong, embedded client base" and high retention levels for advertisers. Contrary to these positive statements, Yelp was actually experiencing weak revenue and declining client retention in its local advertising business as a result of its move from a cost-per-impression system to a cost-per-click advertising system in 2015. Many of the advertisers added during the first quarter of 2016 were experiencing low user engagement under the new cost-per-click advertising system and therefore leaving Yelp's advertising platform at the conclusion of their 12 month contracts. To cover up the loss of clients and revenue, in early 2017, certain Yelp officers and directors made a series of misleading statements about the purported success of the Company's business and advertising model. However, the truth was revealed when Yelp reported its first quarter 2017 financials on May 9, 2017, slashing its revenue guidance and EBITDA due to the churn of advertisers in the first quarter of 2017.
Yelp Inc. (YELP) Shareholders Have Legal Options
Robbins LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. Click Here to receive free alerts from Stock Watch when companies engage in wrongdoing.
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