No Help For Yelp (NYSE: YELP)
On Thursday April 30, 2015 , shares of Yelp (NYSE: YELP) – the widely popular social media company that lets users post reviews on businesses, took a hammering in active New York Stock Exchange trading that saw its shares fall 23.19% to close down $11.89 at $39.39 – levels not seen since 2013.
Earnings and Downgrades
After posting worse than expected earnings and simultaneously receiving multiple Analyst downgrades (RBC Capital,Bank of America and Sterne Agee CRT.), shares sold off in a fairly even and consistent manner- typically indicating large funds liquidating their long positions with limit orders systematically versus panic selling (get me out) trading usually seen in crashes. While revenues were strong, analysts wanted much more.
“Revenue rose about 55% year over year to $118.5 million, but missed the $120 million analysts polled by Thomson Reuters were expecting.”
For the first quarter, Yelp reported a loss of $1.28 million, or per-share earnings of $0.02.
Chart and technicals
Above is a weekly price bar-chart showing the red horizontal long-term support line that was violated today and a possible new settling price in weeks to come- Highlighted by the pink elliptical – down below near the $28 level. The experienced Technical Trader will note the head and shoulders topping pattern that formed from roughly August 2013 to September 2014, culminating in today’s move lower. A head and shoulders pattern is a bearish or negative pattern, usually portending a falling share price.You can find much more information on head and shoulder patterns here, as traded by professional traders.
Accusations and Moving Forward
Going forward, Yelp will have to deal with accusations of bullying businesses into paying for better reviews as well as meeting at least the lower end of Analysts expected numbers in earnings reports that follow.Yelp has stated that they expect to be able to see $131 to $134 million dollars in revenue in the second quarter of 2015.
CORRECTION: The original article incorrectly referred to Sterne Agee CRT. as “Sterne Agee”. This has been corrected.