Yelp’s stock (NASDAQ: YELP), an online platform for discovering local businesses ranging from bars, restaurants, and cafes to hairdressers, spas, and gas stations, has dropped 16% over the last month to around $34, underperforming the S&P 500 index’s 3% decline. Yelp’s Q4 performance exceeded expectations, with net revenue rising 6% year-over-year to $362 million and earnings per share surging to $0.62 (up 68% y-o-y), outpacing the $0.53 forecast. However, the company provided cautious guidance for 2025, citing macroeconomic uncertainties and ongoing operating challenges in the restaurants, retail, and other (RR&O) sectors. Also, refer to Tripadvisor’s Stock Down 30%, What’s Next? In addition, amid rising uncertainty and volatility, review Inflation to Sink S&P 500, Brace For Impact?
For 2025, Yelp anticipates net revenue between $1.470 billion and $1.485 billion (compared to $1.41 billion in FY 2024) and adjusted EBITDA in the range of $345 million to $360 million (vs $358 million in FY’24). The company’s outlook emphasizes high-margin opportunities in services advertising and AI-driven enhancements, despite macroeconomic and competitive challenges. If you prefer growth with less volatility than a single stock, consider the High Quality portfolio, which has outperformed the S&P and delivered >91% returns since its inception.
In 2024, Yelp experienced a 6% year-over-year increase in net revenue, largely driven by a 6% rise in advertising revenues. The Services segment played a crucial role by achieving an 11% year-over-year growth in advertising revenue, reaching $879 million. This increase highlights the segment’s essential contribution to Yelp’s business model. Additionally, Yelp bolstered its presence in the auto services advertising market through the strategic acquisition of RepairPal for $80 million in Q4, positioning itself for incremental revenue growth. Conversely, the RR&O categories encountered difficulties, leading to a 3% decline in advertising revenue to $470 million, due to persistent economic pressures, changing consumer spending habits, and heightened competition from delivery service platforms.
Yelp registered significant achievements, including a 6% year-over-year growth in ad clicks and a 39% year-over-year rise in EPS to $1.88 over the full year. Moreover, adjusted EBITDA increased by 8% year-over-year to a record $358 million. However, the company experienced a 5% decline in total paying advertising locations, primarily due to the downturn in RR&O categories. As an aside, amid increased economic uncertainty, and investors possibly becoming more defensive, see Kimberly-Clark Stock: Navigating Margin Growth And Market Challenges.
We project Yelp’s Revenues to reach $1.5 billion for fiscal year 2025, up 5% year-over-year. In light of adjustments to our revenue and EPS forecasts, we have revised Yelp’s Valuation to $36 per share, based on an expected EPS of $2.28 and a 15.7x P/E multiple for fiscal year 2025, nearly matching the current market price (March 3).
Overall, YELP stock’s performance relative to the index over the past four years has been notably volatile. The stock delivered returns of 11% in 2021, -25% in 2022, 73% in 2023, and -18% in 2024. In contrast, the Trefis High Quality Portfolio, comprising 30 stocks, exhibits considerably less volatility. Moreover, it has comfortably outperformed the S&P 500over the past four years. Why is that? Collectively, HQ Portfolio stocks delivered superior returns with reduced risk compared to the benchmark index, resulting in a less turbulent ride, as demonstrated by HQ Portfolio performance metrics.
It is useful to see how Yelp compares with its peers. The YELP Peers section demonstrates Yelp’s performance against peers on key metrics. You can also find additional comparisons for companies across industries at Peer Comparisons.
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