Yelp (NYSE:YELP) Shares Gap Down - Should You Sell?

Key Points

• Yelp shares gapped down on Thursday, opening at $23.01 after closing at $24.28, and were last down about 7% in trading.
• Analyst sentiment has turned cautious: Morgan Stanley cut its price target to $24 and rated the stock underweight, while MarketBeat shows a consensus rating of “Reduce” with an average target price of $27.88.
• Yelp’s latest earnings beat expectations, reporting $0.30 EPS versus $0.26 expected and revenue of $361.46 million, but insider selling and a stock price below both its 50-day and 200-day moving averages may be weighing on sentiment.

Yelp Inc. (NYSE:YELP - Get Free Report)'s share price gapped down before the market opened on Thursday . The stock had previously closed at $24.28, but opened at $23.01. Yelp shares last traded at $23.1750, with a volume of 84,759 shares trading hands.

Analyst Ratings Changes

Several research analysts have issued reports on the company. Morgan Stanley cut their price target on Yelp from $28.00 to $24.00 and set an "underweight" rating on the stock in a report on Friday, May 15th. Zacks Research upgraded Yelp from a "strong sell" rating to a "hold" rating in a report on Thursday, May 14th. Robert W. Baird set a $28.00 price target on Yelp in a report on Friday, May 8th. Wall Street Zen lowered Yelp from a "buy" rating to a "hold" rating in a report on Saturday, February 14th. Finally, Evercore set a $30.00 price target on Yelp in a report on Monday, May 11th. One equities research analyst has rated the stock with a Buy rating, four have assigned a Hold rating and three have given a Sell rating to the company. According to MarketBeat.com, Yelp has a consensus rating of "Reduce" and an average target price of $27.88.

Yelp Trading Down 7.0%

The company has a debt-to-equity ratio of 0.21, a current ratio of 1.74 and a quick ratio of 1.74. The firm has a fifty day simple moving average of $25.15 and a 200-day simple moving average of $26.24. The firm has a market cap of $1.24 billion, a P/E ratio of 10.32, a price-to-earnings-growth ratio of 2.54 and a beta of 0.47.

Yelp (NYSE:YELP - Get Free Report) last posted its earnings results on Thursday, May 7th. The local business review company reported $0.30 earnings per share for the quarter, beating analysts' consensus estimates of $0.26 by $0.04. Yelp had a return on equity of 20.19% and a net margin of 9.47%.The company had revenue of $361.46 million for the quarter, compared to analyst estimates of $353.47 million. During the same quarter last year, the company earned $0.36 earnings per share. The company's revenue for the quarter was up .8% on a year-over-year basis. On average, equities research analysts expect that Yelp Inc. will post 1.85 earnings per share for the current year.

Insider Activity

In other news, CFO David A. Schwarzbach sold 7,500 shares of the firm's stock in a transaction that occurred on Monday, March 23rd. The stock was sold at an average price of $25.00, for a total value of $187,500.00. Following the transaction, the chief financial officer owned 216,800 shares in the company, valued at $5,420,000. This trade represents a 3.34% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. Also, Director Christine Barone sold 15,507 shares of the firm's stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $22.95, for a total value of $355,885.65. Following the completion of the transaction, the director owned 15,928 shares in the company, valued at $365,547.60. This represents a 49.33% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 33,707 shares of company stock worth $819,145 over the last 90 days. 8.30% of the stock is currently owned by corporate insiders.

Institutional Trading of Yelp

A number of large investors have recently bought and sold shares of YELP. Royal Bank of Canada boosted its holdings in shares of Yelp by 157.8% in the first quarter. Royal Bank of Canada now owns 252,564 shares of the local business review company's stock worth $9,352,000 after acquiring an additional 154,612 shares during the period. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. boosted its holdings in shares of Yelp by 0.7% in the first quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 76,376 shares of the local business review company's stock worth $2,828,000 after acquiring an additional 506 shares during the period. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC boosted its holdings in shares of Yelp by 2.6% in the first quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 208,551 shares of the local business review company's stock worth $7,723,000 after acquiring an additional 5,210 shares during the period. Intech Investment Management LLC boosted its holdings in shares of Yelp by 21.8% in the first quarter. Intech Investment Management LLC now owns 39,377 shares of the local business review company's stock worth $1,458,000 after acquiring an additional 7,053 shares during the period. Finally, Strs Ohio bought a new position in shares of Yelp in the first quarter worth $56,000. 90.11% of the stock is owned by hedge funds and other institutional investors.

About Yelp

Yelp is a digital platform that connects consumers with local businesses through user-generated reviews, ratings and multimedia content. The company's flagship offerings include the Yelp website and mobile applications for iOS and Android, where users can search for and discover restaurants, shops, service providers and other points of interest. In addition to crowd-sourced reviews and photographs, Yelp provides business profile pages featuring hours, contact information, menus and direct messaging capabilities.

Yelp generates revenue primarily through advertising services sold to small and medium-sized enterprises.

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