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Yelp Inc (NYSE:YELP) – May Extend The Decline To $30

Yelp Inc (NYSE:YELP) ended the last trading session sharply lower as it crashed by 23.19% after it posed a poor result for the first quarter of the fiscal year 2015. The California based consumer platform company reported earnings of -$0.02 on a GAAP basis against the expected GAAP EPS of $0.01 and the earnings came at $118.50 million against the daily average of $119.84 million. The GAAP loss actually came down a bit from the 1QFY14 figure of $0.04 but that didn’t encourage the markets much about the stock. The revenue this quarter reflects a 55% increase over the $76.4 million reported in the same quarter last year.

The Yelp Inc (NYSE:YELP) bulls could argue over the sequential growth visible in revenue as in the last quarter, revenue of $109.88 million was reported but the sequential decline seen in the EPS with $0.08 seen in the last quarter, offsets that. The real improvement was seen in the review activity for the quarter, with cumulative reviews growing by 36% y-o-y, a total of 77 million. The visitors’ activity saw an increase of 29% on a y-o-y basis, with average monthly unique visitors at 79 million.

YELP

The poor Q1 result of Yelp Inc (NYSE:YELP), coupled with an outlook implying deceleration for the Q2, has forced RBC Capital to downgrade the stock from “outperform” to “sector perform” with a dramatic cut in the target price from $82 to $52. The house had upgraded the stock about a year back at $58 levels but the call didn’t work.

Technically, the weakness is very clear on the charts too. A pattern of a sharp cut followed by a few months of sideways phase and then another sharp cut – has been solidly established. The volume pattern suggests a lot of distribution too, with the target of $30 in the coming weeks.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.



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