Yelp Inc.: This Is Why YELP Stock is Going Crazy

yelp stockWhat’s Driving Yelp Stock?

Yelp Inc (NASDAQ:YELP) stock got a shot in the arm on Wednesday, climbing over 11% after early morning trading.

The jump comes after a better-than-expected third-quarter report in which, for only the second time, YELP stock has registered two consecutive months of profitability, reporting $2.1 million in net income. Yelp saw gains of roughly 30% in both advertising accounts and cumulative reviews. Local revenue also saw a bump of 41% compared to last year, bringing in $163.6 million this quarter. (Source: “Yelp Announces Third Quarter 2016 Financial Results,” Yelp, November 2, 2016.)

This jump in stock also coincided with an announced reduction of its global workforce while Yelp looks to refocus on North American markets. Yelp has had trouble expanding into international markets, which propagated this proposed four-percent trimming of its 4,350 employees. (Source: “Yelp to Halt Global Expansion, Trim Workforce by 4%,The Wall Street Journal, November 2, 2016.)

New features like “Request a Quote” have helped drive increased user engagement, especially on mobile platforms. The new feature allows businesses to quote a price through Yelp to consumers.

Another bonus for YELP stock in the third quarter was the introduction of transactions, which allows consumers to remotely register for waitlists at over 3,200 restaurants across the United States through the Yelp app.

This current jump represents the bucking of an otherwise downward trend in October. The year on the whole since February (when YELP stock hit its nadir at 15.56) has been a winner for the online review company. October saw YELP stock drop approximately 10 points until the quarterly reports pushed it back up 3.57 points. Overall, Yelp is still recovering from a poor showing in 2015 and has yet to approach its most successful period in 2014.

Wall Street expectations were for a loss of near $0.03 per share for this quarter, and not the $0.02 per share gain.

Looking ahead to the fourth quarter, net revenue is expected to be around $191.0 million to $195.0 million, representing a growth of approximately 26% compared to fourth-quarter 2015. Yelp is also looking to take a $2.0 million to $4.0 million hit as it winds down international sales and offers severance packages for the 175 or so employees who will be let go as the company refocuses on more domestic markets.