Why Yelp Inc. Shares Tumbled Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Yelp Inc. (NYSE: YELP  ) plunged more than 12% Tuesday after a shareholder rights firm launched an investigation into the local business search specialist.

So what: Specifically, Johnson & Weaver LLP is investigating whether Yelp may have violated federal securities laws with misleading statements regarding its "business practices, prospects, and financial condition." The firm says its investigation will center on "the true nature of the reviews appearing on the Company's website, the reliability of the Company's processes and algorithms in screening potentially unreliable reviews, and certain undisclosed business practices including requiring business customers to pay in order to suppress negative reviews."

Now what: While this largely erases last week's gains following Yelp's solid quarterly results, this investigation doesn't guarantee Yelp has actually done anything wrong. What's more, shareholders who weathered Yelp's plunge last month know the allegations aren't anything new. In short, I still don't think long-term investors should be selling Yelp based solely on these short-term concerns. Rather, keep an eye on how Yelp responds to its critics -- if it has nothing to hide and uses this to further improve its processes, shareholders could end up better off in the end.

Are you ready to profit from this $14.4 trillion revolution?
Yelp is trying to make shareholders rich by making the most of a previously untapped market. And let's face it: Every investor wants to get in on revolutionary ideas before they hit it big -- like buying PC maker Dell in the late 1980s, before the consumer computing boom, or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 07, 2014, at 3:57 AM, sanoran wrote:

    According to a 'review' I read, Jeremy Stoppleman raped and sodomized a 14 year old Jewish girl while Stoppleman was serving in the Israeli Army. Stoppleman is a Jew, and all Jews are Israeli first, and regard USA as a country to exploit.

    This review of Stoppleman is authentic, Stoppleman even tried to pay 1000/month to the guy who wrote the review.

    What would we do without freedom of speech , er, reviews.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2946205, ~/Articles/ArticleHandler.aspx, 12/19/2014 6:01:25 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,804.80 26.65 0.15%
S&P 500 2,070.65 9.42 0.46%
NASD 4,765.38 16.98 0.36%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/19/2014 4:01 PM
YELP $54.59 Up +2.10 +4.00%
Yelp CAPS Rating: **

Advertisement