Why Yelp Is Poised to Underperform

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 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

$1.3 billion

Industry

Internet software and services

Trailing-12-Month Revenue

$121.3 million

Management

Co-Founder/CEO Jeremy Stoppelman

CFO Robert Krolik

Trailing-12-Month Return on Equity

(26.2%)

Cash/Debt

$123.1 million / $0

Competitors

Facebook

Google

Yahoo!


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

On CAPS, 84% of the 318 members who have rated Yelp believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, Clint35, expressed a great deal of skepticism over Yelp's business model:

Maybe I'm old-fashioned but I don't get why anybody needs Yelp. As a consumer I wouldn't depend on a bunch of strangers' opinions to decide where to eat or where to go to have fun. As a business owner I wouldn't pay money to have a company show reviews of a bunch of strangers. How does anybody know if the reviews are reliable or not? What's wrong with traditional advertising? Or having a small website? Or Heaven forbid, word of mouth? In today's modern age people still talk to each other. They also have competition from Google and a few others.

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The article Why Yelp Is Poised to Underperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of 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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