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MarketWatch First Take: Yelp’s stock plunge exposes a fragile business model yet again

Yelp Inc.’s glass jaw was shattered yet again Thursday, as earnings sent its shares plunging nearly 30% in late trading, underscoring its ultimate fragility as a business based on reviews.

Yelp YELP, -2.99%reported disappointing third-quarter sales and predicted another disappointment for the holiday period, blaming internal issues including its sales force. Investors may have been able to stomach what could be a blip in the long-term story, but this is not the first time the company has blamed its own operations or sales force issues for a big miss.

Last May, Yelp saw a wave of local advertiser departures, as smaller businesses had a harder time competing in its ad system with more established businesses, fueling an approximate 25% plunge in its stock and its biggest one-day loss since it went public in 2012.

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