Yelp (NASDAQ:YELP) can be a great resource when you’re looking for a new and unfamiliar place to have dinner. But Yelp’s latest earnings report turned into a Yelper’s Special straight out of “South Park” for investors. They dropped shares in droves and bolted, as Yelp was down nearly 14% in Friday afternoon’s trading session after releasing earnings.
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The damage from the earnings report wasn’t exactly that bad, even if investors treated it as a calamity in the making. Earnings per share for the fourth quarter came in at $0.37 per share, which faltered against analyst expectations of $0.38 per share. However, revenue came in at $342.38 million, which not only beat analyst expectations looking for $343.14 million, but was also up 10.8% against this time last year. Projections also offered some positive outlook, with 2024 full-year revenue projected between $1.42 billion and $1.44 billion, which is up between 6% and 8% against 2023’s full year. That, however, was not what investors had in mind, prompting the sell-off.
More Benefit for the Restaurants
While Yelp itself suffered from high expectations from its shareholders, it was clear that Yelp did deliver a lot of value. But not so much to investors as to the restaurants that were featured therein. For instance, after being named to the Yelp top 100 list, a sandwich shop near Sacramento named Guy’s For Lunch saw sales explode. In fact, wait times to get hands on an $11 sandwich have ballooned to the half-hour mark and beyond. Another report noted that Yelp had largely snubbed some of the major world-class options in New York City, instead favoring smaller options that will offer meals for under $30.
Is Yelp a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on YELP stock based on two Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 24.52% rally in its share price over the past year, the average YELP price target of $49 per share implies 28.41% upside potential.
