![]() ![]() ![]() TCS Capital believes that Yelp's chronic underperformance stems from several key factors. These numbers are even more perplexing considering Yelp's consistent revenue growth, particularly in its home services segment, which has seen revenue increase by 20-25% annually over the past four quarters.Īdditionally, Yelp boasts a robust balance sheet with nearly $300 million of net cash and stands to benefit significantly from advancements in AI and machine learning, which TCS believes could enhance the quality and value of its reviews and recommendations. Over the past five years, Yelp's shares are down by around 30%, significantly underperforming broader indexes and also well below its peak of almost $100 per share in early 2014.ĭespite having a widely recognized digital brand, 73 million users, and a colossal 265 million reviews, Yelp trades at remarkably low valuation multiples of 4.8x forward-forecast EBITDA and 8.5x forward cash earnings. TCS Capital's dissatisfaction with Yelp's stock performance seems justified. In a letter addressed to Yelp's board, TCS Capital's founder Eric Semler proposed that the review site platform explore a sale to a strategic or private equity buyer for at least $70 per share - a premium of more than 120% compared to Yelp's current stock price.Īlternatively, Semler suggested that Yelp consider a tax-free merger with Angie’s List parent Angi Inc ( US:ANGI ), a move that could potentially create a dominant player in the lucrative $500 billion home services market. ![]() TCS Capital, which disclosed over 4% ownership of Yelp's outstanding shares this week, has raised serious concerns regarding the company's underperformance and believes it is shockingly undervalued. Since its quarterly low point in early May when YELP reported first quarter results, the stock has rallied almost 30% upwards, back near annual highs. The news sent YELP shares soaring almost 10% higher at one point as traders rushed to back the optimism. In a surprising turn of events this week, online crowd-sourced review website Yelp Inc ( US:YELP ) found itself under the scrutiny of activist investor TCS Capital Management, prompting discussions about strategic alternatives and the potential for a sale. ![]()
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