What happened
Yelp (YELP -0.38%) shareholders outperformed a rising market last month. Shares rose 16% in February compared to a 2.6% gain in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally pushed the tech stock's returns into solidly positive territory for the last year, but shares are still trailing the market's 25% surge since last March.
Image source: Getty Images.
So what
Yelp's early February earnings report included mixed operating results, with sales declining under the weight of pandemic pressures but profitability rising thanks to cost cuts. The growth trend was positive, though, with revenue improving quarter-to-quarter in each of the last two quarters.
Now what
Yelp's business will remain pressured by reduced demand at local businesses like restaurants in early 2021. But there's a clear connection between the pandemic's declining threat and increased usage of the app.
That means Yelp could enjoy a significant rebound over the next few quarters as vaccines help suppress COVID-19 outbreaks. Investors are hoping that this boost, combined with the efficiency gains that management has enacted in the past year, will lead to sustainable profit generation following the $19 million loss the tech stock posted for fiscal 2020.
