1-Star Social-Media Stocks Set to Slump: Yelp?


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 and see what CAPS investors are saying about the stock right now.

Yelp facts

Headquarters (founded)

San Francisco (2004)

Market Cap

$1.6 billion


Internet software and services

Trailing-12-Month Revenue

$107.3 million


Co-Founder/CEO Jeremy Stoppelman
CFO Robert Krolik

Trailing-12-Month Operating Margin



$122.6 million/$0


Facebook (NAS: FB)

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

On CAPS, 90% of the 367 members who have rated Yelp believe the stock will underperform the S&P 500 going forward.

This past summer, one of those Fools, JaiYen, offered some unique insight into the Yelp bear case:

I am a small business owner and would be quickly bankrupt were I so silly with my ad dollars as to buy into such a flawed model. If I have good reviews, why buy the cow when the milk is free? If I have bad reviews, why highlight my presence on Yelp? It's expensive and a lose, lose proposition for their core small business market. I can personally attest that their strong armed sales tactics and outrageous pricing have been the subject of much ridicule at our local Chamber of Commerce. This is the view from the ground. Anyone buying this stock has their head in the clouds.

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The article 1-Star Social-Media Stocks Set to Slump: Yelp? originally appeared on Fool.com.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook and Google. 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 Motley Fool has a disclosure policy.

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