Yelp Stock Infographic: Is It One or Five Stars?

Yelp's stock price has taken a hit recently. Is it time to buy? Check out this infographic to find out.

May 19, 2014 at 10:05AM

The business review site Yelp (NYSE:YELP) has had a rough past three months, with its stock price down nearly 40%. With such a decline in value, you might wonder if it's time to buy into a site that seems to have trending concepts like local, mobile, and online advertising behind it. To help discover that answer, check out the below infographic and the following discussion on whether Yelp is a buy or sell.


Source: Yelp 10-Ks and 10-Qs.

Mobile threat
Yelp maintains a strong mobile presence, with mobile users growing over 50% in the first quarter of 2014 versus the first quarter of 2013. As mobile use increases, Yelp's free application can continue to grow its audience and expand functionality for both businesses and users. For example, Yelp just released a new service for small businesses to book reservations, outside of its more complete SeatMe service or through the OpenTable (NASDAQ:OPEN) integration. OpenTable's stock suffered after Yelp announced this new service, but Yelp and OpenTable's 600 other partners only contribute between 5% and 10% of North American online reservations with the majority coming from restaurant websites and OpenTable's own sites and applications.

Don't shoot the messenger
Reviews on Yelp have been proven to sway consumer preferences. Unfortunately for some businesses, they have swayed customers toward a competitor. Yelp maintains that it's completely impartial, only removing reviews that it deems fraudulent with its algorithm, but many businesses regularly complain about questionable practices if they decide not to advertise with Yelp. Yelp has even created a webpage to simply explain that an advertiser only buys an advertisement, and not manipulated reviews.

Even if it's just a case of businesses taking up a fight with Yelp rather than the displeased customers, it's unlikely Yelp will be able to completely clear its name. But as a positive sign for the company, the proportion of businesses buying advertising has risen to 4.6% out of the total businesses that have been "claimed" by the business owners. This is up from 4.1% last year.

Buy or sell Yelp
Overall, Yelp still has yet to post a profit and has ramped up marketing costs to push revenue, but the company can afford this with $400 million in cash and little debt. It does have a strong brand with a growing audience of both users and advertisers, even though growth seemingly has not been as fast as some stockholders desired. As Yelp ropes in more businesses, continues to work to shed its somewhat tainted image, and becomes the go-to site for consumers looking to spend money, the long-term prospects look solid.

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Dan Newman has no position in any stocks mentioned. The Motley Fool recommends OpenTable and Yelp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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