logo
  Join        Login             Stock Quote

Yelp, Inc. (YELP) Shares Not Liking Facebook's (FB) Graph

 January 16, 2013 02:53 PM


(By Rich Bieglmeier) Yelp, Inc. (YELP) got chewed up and spit out yesterday on news that Facebook, Inc. (FB) launched an internal search engine called Graph. The fear is that Facebook users will search reviews for where to eat, shop, drink, relax, and play on graph rather than the opinions locals found on Yelp.

Yelp shares have yelped since Mark Zuckerburg's Graph, dog and pony show. The stock is down more than 10% from Tuesday's opening price of $22.27. FB's announcement and YELP's reaction has the Twitter world twitting – twits increased more than 1,200%.

Twitter opinions are mixed:

[Related -Facebook Inc. (FB) Q2 Earnings Preview: Scoring Big on the World Cup]

atlantatweeps writes, "$YELP laughing at $FB search" / its like YELP but without all the content and reviews."

Howardlindzon agrees, "only $YELP can kill yelp...but investors do scare easily in low rev biz's. "

DeidreZune dissents, "But $FB competitors are not faring well. $YELP is yelping. Mighty $GOOG now faces cloudy skies. $FB search is really #USEFUL #INNOVATIVE."

Patient investors might be able to get YELP shares a little cheaper if they are interested in buying weakness. There is a thin layer of support near and in today's price range. However, just about a buck lower we find multiple layers of support.

[Related -Facebook Inc. (NASDAQ:FB): A 3T Review: Is FB About to Face Plant?]

After crashing in early November, the online review site had a difficult time getting on top of and staying north of $19. The stock seemed to break out of that mess at the start 2013, only to be sent reeling by Facebook's announcement. In addition, YELP's 50-day moving average shares the same neighborhood at $19.18. We think there is a better than 50% chance that YELP tastes the 50-day benchmark.

It's too early to tell what sort of impact Graph will have on Yelp traffic. But, we can take a look at web traffic and search queries to see how well YELP is doing as of late.  

According to Alexa.com, YELP's year-over-year web traffic is down; however, search queries are up about 20%. The apparent conflict makes sense in this context; people tend to be more specific when searching than when visiting a site. For example, Domino's Pizza YELP review versus going to yelp.com and then looking for Domino's – makes sense, right?

Wall Street believes YELP will earn 2 cents in 2013 and generate earnings growth of 18.50% for the next three-to-five years. Meanwhile, 2013 revenue is slated for 52% growth.  At $20, the stock trades at 1000 times 2013 eps. That's a little rich for us.

And so are YLEP's price-to-sales of 10.75, price-to-book (although probably not an important metric for a company like YELP, yet) of 8.97, and negative returns on equity and investment.

Overall, Yelp, Inc. (YELP) is appropriate for speculative investors, in our view. The company has to prove its model can turn a profit, and now that it can stand against Facebook; two uncertainties and you know how much Wall Street like uncertainty.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageFord Motor Company (F) Q2 Earnings Preview: Light on the Top Line?

Ford Motor Company (NYSE:F) will release its preliminary second quarter 2014 results at 6:30 a.m. EDT read on...

article imageTripadvisor Inc. (TRIP) Q2 Earnings Preview: On Target Enough?

Tripadvisor Inc. (NASDAQ:TRIP) will release its second quarter financial results after market close on read on...

article imageFacebook Inc. (FB) Q2 Earnings Preview: Scoring Big on the World Cup

Facebook Inc. (NASDAQ:FB) will post its second-quarter 2014 financial results after the market close on read on...

article imageThe Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater

The Boeing Company (NYSE:BA) will publish its second-quarter financial results before the open of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.