Yelp Inc (NYSE:YELP) released its earnings report for the first three months of 2013 this afternoon after the stock market closed. The social network showed a loss per share of 8 cents for the first quarter, on revenue of $46.1 million. On today’s market, stock in Yelp Inc (NYSE:YELP) trended down, closing at $25.30 per share.
Before this report was released, analysts studying the company were looking for a loss per share of one cent on revenue of $44.6 million. In the same three months of 2012, Yelp Inc (NYSE:YELP) lost 31 cents per share on revenue of $27.4 million. In the hours leading up to the release of this report, whisper numbers indicated that Yelp Inc (NYSE:YELP) would fail to hit the targets of analysts.
Earlier this month, value investor Mohnish Pabrai took part in a Q&A session with William & Mary College students. Q3 2021 hedge fund letters, conferences and more Throughout the discussion, the hedge fund manager covered a range of topics, talking about his thoughts on valuation models, the key lessons every investor should know, and how Read More
So far in 2013, shares in Yelp Inc (NYSE:YELP) have increased by more than 35 percent. Investors have lined up behind the local driven web network in the hopes that it will announce its first profit in 2014. The company is expected to lose just 4 cents in 2013. At its current price, however, most analysts following the company, eight of thirteen, are recommending investors don’t buy in.
Yelp Inc (NYSE:YELP) shares are currently standing at more than $25.50. The firm does not make a profit, but it’s worth around $1.6 billion. Yelp Inc (NYSE:YELP) needs to grow soon if talk of another social media bubble is to be kept from interfering with its share price. One of its biggest rivals, Facebook Inc (NASDAQ:FB) saw exactly what that does to a firm’s equity last year.
Facebook Inc (NASDAQ:FB) is currently developing its own services that compete directly with Yelp Inc (NYSE:YELP) and that company’s motions will be a big indicator of Yelp Inc (NYSE:YELP) success. There will be no return for investors if Yelp manages to monetize the local web, only to see someone else do it better. Facebook has the resources and motivation to be that someone.
Yelp Inc (NYSE:YELP) investors are wading in deep waters, the company carries a lot of underlying risk, and its position as the new cool social network for investors to get involved in probably has not helped the firm do its job. This time last year there were three big analysts following Yelp, now there are twelve.
Yelp Inc (NYSE:YELP) has increasing users and increased monetization, and if it can continue these trends, as it means to, while fending off competition from the bigger social media players, investors might just have made the right bet.