“Yelp needs help” was the joke of finance Twitter Tuesday, as the company’s stock plummeted down by more than 28 percent in after-hours trading.
That’s an extreme dip and a bad look for a company that has been desperately attempting to climb back to its heights of 2014. Yelp’s stock was ripped to shreds after the company reported sales under analysts’ forecasts and also slashed its own revenue estimates for the year.
In other words, we didn’t do as well as people had expected, and the future isn’t looking great either.
Yelp dropped its forecast of $880 million to $900 million down to the range of $850 million to $865 million. While Yelp’s chief financial officer Lanny Baker preached good things ahead in his prepared earnings statement, the Street clearly sought to abandon ship.
“While we are lowing our revenue and adjusted EBITDA outlook for the year,sales productivity has rebounded, transactions revenue has accelerated and weve seen promising results from our newly expanded retention efforts,” Baker’s statement read.
Why the struggle? Perhaps it’s an onslaught of competition and the decreased coolness of Yelp. For sure, they incidentally made sure small businesses hated them by suggesting they pay up to get rid of bad reviews.
Meanwhile, both Facebook and Google have been deepening reviews and their relationships with small businesses.
In March, Google released a tool for reserving fitness classes that also accompanies reviews on its site. Facebook now has a tab on its app for “Your Places” along with “City Guides.” It’s also experimenting with “Offers,” a discount code system at participating businesses.
It’s not that Yelp has done nothing to expand beyond being a restaurant review site. Yelp bought online food delivery company Eat24 in 2015 and it recently has been experimenting with food delivery robots.
Once upon a time, Yelp was believed to be exploring a sale.