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YELP if BREAKS will JERK and LEAP

Yelp is a media company that brings content with crowd-sourced reviews and ratings of local businesses to its audience of users via Yelp.com and the Yelp mobile app. It earns most of its revenue by selling advertisements to local businesses, as well as the online reservation service.

It certainly has the potential to catch up with other B2C platform companies and in the wake of Google, Facebook, Yahoo, Craigslist, TripAdvisor, etc. to significantly grow its users base, which is still a meager 28 million monthly mobile app unique users as of June 2017. The platform is also expanding its reach worldwide but usage is still mostly US-centered.

The platform popularity and usage is on an exponential growth curve as per the the number of reviews published.

From the above aspects the growth potential is tremendous and it certainly is a good time to pay some attention to the stock price of and invest in the company for the long term.

The stock price is making broad price swings but appears to be ready to extract itself from a long term foundation following a massive corrective move that brought the price from $102 in March 2014 down to $14.5 in February 2016. The mania stage may therefore have ended beginning of 2014 and the stock price be ready to resume a longer term and more regular uptrend. From the low reached four months ago it has been climbing up into the $40 area and has been exchanged more heavily every time it went down hitting the rising support line.

Yelp price chart

The trend (30-week moving average) is now stabilizing again (green horizontal arrows) and should be a good sign of a reversal to the upside and nascent uptrend. The stock price is knocking repeatedly against a slightly rising resistance line and will become a buy should it make a decisive break above $42.5. Another but less likely possibility is for the stock price to drop back into the $34 demand area before lifting off again.

BREAK-OUT STRATEGY (higher probability):
– Buy a decisive breakout above $42.5 $43.5*.
– Initial stop-loss should be placed slightly below $30.

*Edited on 10 Sept 2017 as the resistance level indicated was wrong.
Weekly Price closed at $43.75 but it is inconclusive for now.

CORRECTIVE MOVE STRATEGY ((lower probability):
– Should the price move down buy as close to $34 as possible.
– Initial stop-loss should be placed slightly below $30.

Disclosure: I have no position in YELP.

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