1-Star Stocks Poised to Plunge: Yelp?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, local business review site Yelp (NYS: YELP) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Yelp's business and see what CAPS investors are saying about the stock right now.

Yelpfacts

Headquarters (founded)San Francisco (2004)
Market Cap$381.3 million
IndustryInternet software and services
Trailing-12-Month Revenue$83.3 million
ManagementCo-Founder/CEO Jeremy Stoppelman
CFO Robert Krolik
Trailing-12-Month Return on Equity(50.9%)
Cash/Debt$21.7 million / $0
CompetitorsFacebook
Google
Yahoo!

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 94% of the 296 members who have rated Yelp believe the stock will underperform the S&P 500 going forward.

Earlier this month, one of those Fools, BFatConservative, succinctly summed up the bear case for our community:

In a crowded IPO offering of knick knack technology offerings, if any of them are susceptible to user decay, over rosy projections, and just general positive speculation it is Yelp.

Quite honestly, I don't believe in the service offering and don't see how this will ever be extremely profitable. I see them on gobbled up eventually by a much larger tech company, and added to a larger service offering.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Google and Yahoo!. Motley Fool newsletter services have recommended buying shares of Google and Yahoo!. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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