Value
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.6 |
| P/S | 9.7 |
| EV/EBITDA | 7.5 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 6.4x
- ▸PEG: 0.07
- ▸Attractively valued
YELP · Why this verdict
Why Yelp (YELP) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Yelp derives approximately 95% of revenue from advertising, creating extreme product concentration where any structural shift in local digital advertising—whether from platform changes at Google, AI-driven search displacement, or SMB budget reductions—directly impairs virtually all revenue. Bear case | Advertising revenue grows by more than 5% year-over-year in at least 2 of the next 4 quarters, demonstrating resilience against platform substitution risks. | →Stable |
| CounterConcentrated revenue in local advertising is the deliberate design of Yelp's business model, and the 203% FCF conversion suggests the business generates real cash from that concentration. | ||
With 25% of the float sold short against a quality score of 7.5, a 9-out-of-9 Piotroski F-Score, and extremely cheap valuation at a forward P/E of 5.3x, there is a notable squeeze setup where positive news could force aggressive short covering and drive a sharp price recovery. Key risks | Short interest falls below 15%, declining more than 10 percentage points from the current 25%, within 12 months as fundamental quality attracts more buyers than sellers. | →Stable |
| CounterHigh short interest with persistent momentum weakness and a death cross typically reflects well-informed institutional shorts positioned on structural business deterioration, not mispricing. | ||
Yelp's 200-day moving average is declining at negative 4.7% per month with a death cross confirmed and on-balance volume falling, placing the stock near a 52-week low at only 1% above its lowest point, which contradicts the strong fundamental quality profile. Momentum breakdown | Price reclaims the 200-day moving average and holds above $24 for at least 20 consecutive trading days within the next 12 months. | →Stable |
| CounterCheap, high-quality stocks with confirmed death crosses and falling OBV in a downtrend rarely recover quickly; the technical setup can persist for multiple quarters. | ||
A 203% free cash flow conversion ratio relative to net income, a forward P/E of 5.3x, and a PEG of 0.06 create one of the most attractive valuation floors in the Communication Services sector, suggesting significant fundamental undervaluation if the advertising business stabilizes. Quality breakdown | Free cash flow conversion remains above 150% of net income and forward P/E expands above 8x within 12 months as the quality discount begins to close. | →Stable |
| CounterLocal advertising platforms with declining revenue momentum typically see further multiple compression rather than expansion, and the 5.3x P/E may be a value trap rather than a floor. | ||
Yelp derives approximately 95% of revenue from advertising, creating extreme product concentration where any structural shift in local digital advertising—whether from platform changes at Google, AI-driven search displacement, or SMB budget reductions—directly impairs virtually all revenue.
→StableBear case
- Expectation
- Advertising revenue grows by more than 5% year-over-year in at least 2 of the next 4 quarters, demonstrating resilience against platform substitution risks.
CounterConcentrated revenue in local advertising is the deliberate design of Yelp's business model, and the 203% FCF conversion suggests the business generates real cash from that concentration.
With 25% of the float sold short against a quality score of 7.5, a 9-out-of-9 Piotroski F-Score, and extremely cheap valuation at a forward P/E of 5.3x, there is a notable squeeze setup where positive news could force aggressive short covering and drive a sharp price recovery.
→StableKey risks
- Expectation
- Short interest falls below 15%, declining more than 10 percentage points from the current 25%, within 12 months as fundamental quality attracts more buyers than sellers.
CounterHigh short interest with persistent momentum weakness and a death cross typically reflects well-informed institutional shorts positioned on structural business deterioration, not mispricing.
Yelp's 200-day moving average is declining at negative 4.7% per month with a death cross confirmed and on-balance volume falling, placing the stock near a 52-week low at only 1% above its lowest point, which contradicts the strong fundamental quality profile.
→StableMomentum breakdown
- Expectation
- Price reclaims the 200-day moving average and holds above $24 for at least 20 consecutive trading days within the next 12 months.
CounterCheap, high-quality stocks with confirmed death crosses and falling OBV in a downtrend rarely recover quickly; the technical setup can persist for multiple quarters.
A 203% free cash flow conversion ratio relative to net income, a forward P/E of 5.3x, and a PEG of 0.06 create one of the most attractive valuation floors in the Communication Services sector, suggesting significant fundamental undervaluation if the advertising business stabilizes.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 150% of net income and forward P/E expands above 8x within 12 months as the quality discount begins to close.
CounterLocal advertising platforms with declining revenue momentum typically see further multiple compression rather than expansion, and the 5.3x P/E may be a value trap rather than a floor.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Yelp is a high-quality local advertising platform with a 9-out-of-9 Piotroski F-Score, 203% free cash flow conversion, and one of the lowest forward P/E ratios in its peer group at 5.3x, but 95% revenue concentration in advertising, 25% short interest, and a confirmed death-cross downtrend keep the risk-reward unfavorable for new entry at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.8 |
| ROA | 7.8 |
| Gross margin | 10.0 |
| Op margin | 3.6 |
| Net margin | 4.7 |
| Current ratio | 6.2 |
| FCF quality | 10.0 |
| Moat | 7.9 |
| Rule of 40 | 3.0 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 203% FCF/NI
- ▸Wide economic moat
- ▸Rule of 40: 20 (fail)
- ▸Strong Piotroski F-Score: 9/9
Growth
6.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.7 |
| EPS growth | 10.0 |
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.9 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Overbought bear rally (RSI 72)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.3%/30d — confirmed downtrend
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 4.9 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $635,711 (0.044% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.9 |
| quality rank | 6.4 |
| growth rank | 2.1 |
Technical
1.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.0 |
| 52w position | 4.0 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.8 |
| days to cover | 4.1 |
| volatility | 2.4 |
| put call | 10.0 |
| implied vol | 1.8 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 9.0 |
- ▸Short squeeze setup: 24% short, quality 7.5
- ▸High IV: 70%
- ▸Above max pain $14
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 7.3 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.9=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=5.8>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.89
Upside
-13.4%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 72
EdgeInst Constrain — Small cap ($1.5B) below institutional reach
SuitabilityAggressive — MCap $1.5B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.8>=5.5. Top dim: Value at 8.0; weakest: Technical at 1.7. No conviction either direction.
The strongest dimensions are Value at 8.0, Quality at 7.0, and Catalyst at 6.4; the weakest are Technical at 1.7, Peer rank at 3.9, and Insider at 3.9. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.89 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Advertising Concentration Platform Risk
Trip ifAdvertising revenue declines more than 5% year-over-year in at least 2 of the next 4 quarters.
- P225pct Short Interest Quality Squeeze Setup
Trip ifShort interest rises above 30%, exceeding the current 25% by more than 5 percentage points.
- P3Death Cross Negative Momentum
Trip ifPrice falls below $20.99 stop-loss, declining more than 7% from the current $22.57.
- P4Exceptional Fcf And Valuation Floor
Trip ifForward P/E falls below 4.0x as earnings estimates are cut by more than 25% from current levels.