Please ensure Javascript is enabled for purposes of website accessibility

Why Yelp, Inc. Stock Plunged Today

By Steve Symington - Feb 8, 2016 at 12:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The local-business review specialist fell ahead of its quarterly report. Here's what investors need to know.

What: Shares of Yelp (YELP 4.80%) were down 11.9% as of 11:15 a.m. ET after analysts at Susquehanna reduced the firm's per-share price target for the Internet-based local business review company to $20 from $22.

So what: Susquehanna also reiterated its neutral rating on the stock. To be fair, however, that's still a healthy premium from Yelp's current price around $16 per share. And Yelp stock has been effectively crushed amid the broader market's pullback so far this year, more than giving up the 30%-plus gain it enjoyed after posting solid third-quarter results at the end of October.

Now what: You can bet Yelp hopes to put any concerns of rising competition and sluggish growth behind it with this evening's report. In particular, the report should offer perspective on Yelp's increasing role in guiding consumers' shopping habits as mobile Internet connectivity becomes more ubiquitous.

In November, for example, Yelp management announced its mobile app had grown to represent around 71% of all searches across Yelp's ecosystem. Going forward, Yelp will also need to demonstrate to investors that growth in monthly unique visitors (up 22% year over year in Q3 to 89 million) can continue offsetting declines in desktop monthly unique visitors (down 2% last quarter to 79 million). In the end, if Yelp shows it managed to carry forward last quarter's momentum into the crucial holiday season, don't be surprised if the stock's subsequent pop erases this morning's deficit.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Yelp Inc. Stock Quote
Yelp Inc.
YELP
$30.33 (4.80%) $1.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.