Yelp Slumps After Downgrade

By Naomi Wentworth • Tuesday, December 20 12:06 • Permanent Link

YELP investors were likely spooked this afternoon by Barrons's report: "J.P. Morgan downgraded shares of Yelp the provider of local-market restaurant and business recommendations, to Underweight from Neutral, citing concerns regarding the scaling of the company's advertising business model." For more coverage, read the full article here. On the back of this news, Yelp sank -3.4% to a price of $25.77. Are the markets overreacting?

Yelp Inc. operates a platform that connects consumers with local businesses in the United States and internationally. The company belongs to the Communication Services sector, which has an average price to earnings (P/E) ratio of 18.65 and an average price to book (P/B) ratio of 2.62. In contrast, Yelp has a trailing 12 month P/E ratio of -95.5 and a P/B ratio of 2.3.

At today's price of $25.77 per share, Yelp is -33.35% away from its target price of $38.67, and on average, analysts give the stock a rating of hold. 6.5% of the company's shares are linked to short positions, and 98.2% of the shares are owned by institutional investors.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.