YELP Stock Analysis

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Yelp Inc (NYSE: YELP)

 

DESCRIPTION

“Yelp Inc. connects people with local businesses. The Company’s users have contributed a total of approximately 52.8 million cumulative reviews of almost every type of local business, from restaurants, boutiques and salons to dentists, mechanics and plumbers. Its platform provides local businesses with a range of free and paid services, which help them to engage with consumers at moment when they are deciding where to spend their money. As of September 30, 2014, the Company was active in 61 Yelp markets in the United States and 66 Yelp markets internationally. The Company’s business revolves around three constituencies: the communities of contributors who write reviews, the consumers who read them and the local businesses that they describe. The Company’s products include Free Online Business Account, Enhanced Listing, Search and Other Ads, and Call to Action. “

 

 

TECHNICAL ANALYSIS

YELP has broken its down trend following a pop in the broader markets yesterday. Earnings season is under way and investors are showing their interest in companies like Yelp Inc. Yesterday, Yelp’s trading volume was 2.22 times the average, indicating buyers are piling into this stock and accumulating shares after a long consolidation period. We can see the $1.95 bump in share price yesterday indicating YELP was ready to move out of its range. It has formed a new five day high on increasing volume. YELP will be reporting earnings on Wednesday April 29, after the market close. Past performance has been great, and YELP was a beat in all quarters during 2014. This kind of data tends to be a positive indicator for fundamental investors. Yelp Inc has seen great financial success, and currently have more cash than debt. When looking at the days to cover data for short sellers, the total days to cover is at 2.8, indicating a smaller short interest than many other big board stocks. However, as we continue to move toward earnings, we can expect to see some mild short covering as short sellers are looking to move out of the way of this historical earnings winner. Buyers will continue to pour in on volume as expectations for another beat will gradually move the price higher. The beta for YELP is high at 2.54, which is 1.54 more volatile than the market. This makes for an attractive buy in a secular bull market that is in its own up trend. Apart from the technicals, the company has acquired EAT24.com, an online firm for $134 million, with the expectation of adding to the bottom line and increasing growth. The first price target for YELP will be $55 followed by $61.

 

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