Yelp Stock In Position for Further Gains?
Yelp (NYSE: YELP), an online site for discovering local businesses ranging from bars, restaurants, and cafes, to hairdressers, spas, and gas stations, has increased by almost 11% over the last five trading days (one week) and currently stands at over $41. While Q4 revenues fell in double-digits due to pandemic pressures, the growth trend was positive with revenue improving quarter-to-quarter in each of the last two quarters. In addition, Yelp saw rising profitability on the back of cost cuts, and a one-time tax benefit in the recent fourth quarter. Overall, the market outlook for Yelp has grown as the vaccine rollout gained steam since last month. This could, eventually, make way for Yelp’s business to grow again after it posted a revenue decline of 14% year-over-year and a net loss of $19 million in 2020. It should be noted that the broader S&P 500 returned roughly 5% growth over the last five days. Now, is YELP stock poised to grow further? Although we believe the company remains fundamentally overvalued, Yelp has momentum on its side, and there could be room for more gains in the stock. Specifically, there is a 58% chance of a rise in YELP’s stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last nine years. See our analysis on YELP‘s Stock Chances of Rise for more details.
Five Days: YELP 11%, vs. S&P500 4.9%; Outperformed market (7% likelihood event)
- Yelp stock rose 11% over a five-day trading period, compared to broader market (S&P500) rise of 4.9%
- A change of 11% or more over five trading days is a 7% likelihood event, which has occurred 149 times out of 2266 in the last nine years
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Ten Days: YELP 12%, vs. S&P500 3.3%; Outperformed market (31% likelihood event)
- Yelp stock rose 12% over the last ten trading days (two weeks), compared to broader market (S&P500) rise of 3.3%
- A change of 12% or more over ten trading days is a 31% likelihood event, which has occurred 704 times out of 2250 in the last nine years
Twenty-One Days: YELP 7.7%, vs. S&P500 1.1%; Outperformed market (17% likelihood event)
- Yelp stock rose 7.7% the last twenty-one trading days (one month), compared to broader market (S&P500) rise of 1.1%
- A change of 7.7% or more over twenty-one trading days is a 17% likelihood event, which has occurred 368 times out of 2208 in the last nine years
While YELP stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Rollins vs. Alphabet shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.
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