- "With press reports noting Yelp has backed away from considering a sale, asset value provides less of a safety net for deteriorating fundamentals," writes Deutsche's Lloyd Walmsley, downgrading YELP to Hold ahead of this afternoon's Q2 report, and 8 days after Barclays issued a similar downgrade.
- Walmsley: "Local online advertising has turned out to be harder to monetize that we anticipated. We think this is fixable but could require a shift in strategy, a heavy investment in ad product and/or cooperation with/ownership by a scale player ... Yelp has seen what appears to be deteriorating salesforce productivity and/or rising churn over the past several quarters, with limited growth in net new Local Advertising Accounts (LAA)."
- He's also concerned about international traffic/revenue, growing competition, Google search dependency, high churn rates among local SMB advertisers, and Yelp's transactional (non-ad) revenue ramp.
- Cantor defended Yelp yesterday, albeit while cutting its 2015 estimates. "[W]e believe the local online ad opportunity remains substantial and the number of players with scale, brand, network effect, and solid execution is limited, positioning Yelp as a prime beneficiary both as operator and acquisition target."
- Shares have made new multi-year lows. They're down 40% YTD, and now trade for 3.2x 2016E sales.