What Happened?
Shares of local business platform Yelp (NYSE: YELP) fell 7.1% in the morning session after its second-quarter earnings report, which showed a beat on revenue and profit but was accompanied by a cautious outlook for the rest of the year. Although the company surpassed second-quarter revenue and earnings forecasts, its forward-looking guidance raised red flags for investors. Yelp posted Q2 revenue of $370.4 million, a 3.7% year-over-year increase, and earnings per share of $0.67, beating estimates. However, the company's full-year adjusted EBITDA guidance of $355 million at the midpoint fell below analysts' expectations, even as it maintained its full-year revenue forecast of around $1.47 billion. This muted outlook seemingly overshadowed the strong quarterly performance for investors, as the stock traded down after the announcement.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Yelp? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Yelp’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 10% on the news that the company reported strong first quarter 2025 results that blew past analysts' EBITDA and sales estimates. What's more impressive is that Yelp kept costs in check, letting more of those dollars fall to the bottom line as profits rose faster than sales. Overall, this print had some key positives.
Yelp is down 17.8% since the beginning of the year, and at $32.11 per share, it is trading 22.2% below its 52-week high of $41.25 from January 2025. Investors who bought $1,000 worth of Yelp’s shares 5 years ago would now be looking at an investment worth $1,393.
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