Yelp is not living up to its potential according to activist investor TCS Capital, who in a letter, is pushing for action and a new CEO.
"The purpose of this public letter is to express our serious concern and disappointment with the abysmal performance of Yelp’s stock price and to demand that the Board immediately explore strategic alternatives. We believe that Yelp is shockingly undervalued and could be sold to either a strategic or private equity buyer for at least $70 per share – or more than a 120% premium to Yelp’s current stock price based on reasonable valuation assumptions" wrote CEO Eric Semler.
Shares jumped on the developments.
While Yelp shares have gained over 30%, including today's jump this year, outperforming the S&P's 9% gain, Semler points out the long-term returns are "horrific."
"We have owned shares of Yelp for most of the last five years. Over that time period, Yelp shares have declined 30% and underperformed the S&P 500 by 98%. Over the last 10 years, Yelp’s share price has been flat, underperforming the S&P 500 by a staggering 208%. Amid this horrific underperformance, Yelp has become one of the most undervalued stocks that we have encountered in our 22 years as an investment firm" the letter detailed.
Semler also lashed out co-founder and CEO Jeremy Stoppelman,
"Despite the stock’s poor performance, Mr. Stoppelman has remained CEO of the Company for nearly 20 years. We believe he inappropriately runs the Company as his private fiefdom" Semler alleged.
JEFF BEZOS, LAUREN SANCHEZ ENGAGED
TIKTOK FUELING PERFORMANCE CRIMES
A Yelp spokesperson told FOX Business:
"Yelp maintains an active dialogue with our shareholders and values constructive feedback on our business and ways to create value."
Semler is suggesting Yelp combine with Angie's List, which provides consumers the name of contractors and others for services needed.
"We believe Yelp should explore a tax-free merger with Angi Inc. ("ANGI," formerly known as Angie’s List) to form a powerhouse in the $500 billion home services market. As a former board member and longtime investor in ANGI, I believe that a Yelp and ANGI combination would yield enormous revenue synergies and cost savings that could ultimately double the value of Yelp’s shares" he added.
Inquiries to Angie's list by FOX Business were not immediately returned.
