Social media business review platform Yelp (NYSE:YELP) stock has been in a consolidation for months showing signs of an impending breakout. The popular social media platform for dining and business services reviews has been dormant for months while other social media stocks have flourished. While they beat on Q1 2021 earnings, they also raised full-year top line guidance and may still be lowballing the next quarter. Business naturally fell off a cliff during the pandemic so a likely rebound is expected as COVID vaccinations continue to accelerate with restaurant and business reopenings. As capacity restrictions get lifted and more consumers are returning to indoor dining, Yelp should continue to gain from traffic and advertising. The Company was able to beat analyst estimates handily with only 50% of the pre-pandemic headcount. This bolstered adjusted EBITDA margins to 19%. Prudent investors looking for a recovery play that has yet to flourish can watch for opportunistic pullbacks in shares of Yelp to gain exposure on the reopening rebound of restaurants.
Q1 FY 2021 Earnings Release
On May 6, 2021, Yelp released its fiscal first-quarter 2021 results for the quarter ending March 2021. The Company reported an adjusted earnings-per-share (EPS) loss of (-$0.08) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.26), beating estimates by $0.18. Revenues fell by (-6.8%) year-over-year (YOY) to $232.1 million beating analyst estimates for $228.4 million. Adjusted EBITDA was $44 million, equating to a 19% margin. Yelp CEO, Jeremy Stoppelman stated:
“Yelp’s mission of connecting people with great local businesses has never been more important, as local economies begin to recover and people return to businesses in their community. At the same time, our strategic initiatives continued to gain momentum in the first quarter, achieving record retention and revenue from our Services categories and Self-Serve channel.”
Full-Year 2021 Guidance Raised
Yelp raised its full-year 2021 forecast for revenues between $1.00 billion to $1.02 billion, up from a range of $985 million to $1.005 billion, versus $998.46 million consensus analyst estimates. The Company expects adjusted EBITDA of $175 million to $195 million.
Conference Call Takeaways
CEO Stoppelman set the tone:
“Our first-quarter results represent a strong start to the year driven by the success of our go-to-market shift and an increased focus on product innovations, which together comprise the foundation of our next stage of growth. We saw a record performance from our Services categories, Self-Service channel, and non-term advertiser budget retention. Revenue growth in the Self-Serve channel accelerated once again to approximately 30% year-over-year in the first quarter. Services revenue performance was driven by the ongoing strength in home services, which increased by nearly 15% year-over-year.”
He indicated the strong return of consumer traffic in local economies especially in the COVID impacted businesses in the first quarter. “Encouraging traffic and recovery trends” continued into April as restaurant searches grew 40% since December 2020. He concluded:
“We were able to achieve these results with local sales headcount remaining at approximately 50% of pre-pandemic levels, which also enabled up to improve let loss by $10 million year-over-year to $6 million and deliver a 19% adjusted EBITDA margin, while heavily investing in our growth initiatives.”
YELP Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a broad playing field view of the landscape for YELP stock. The weekly rifle chart has been in consolidation as the Bollinger Bands (BBs) have been in a contraction. The 5 period moving average (MA) is at $40.13 and 15-period MA is at $39.87. Shares have bounced off the $36.89 Fibonacci (fib) level multiple times as the lower BB. The weekly forms a market structure high (MSH) sell trigger on a breakdown below the $36.37. The weekly market structure low (MSL) buy triggered above $32.75. The weekly stochastic crossed up but stalled. This sets up either a mini pup breakout above the 5-period MA $40.13 or a cross down under the weekly 15-period MA. The daily rifle chart is in a downtrend with a falling 5-period MA at $39.19 as stochastic crosses down towards the 30-band. The BBs are starting to expand after compressing for several weeks.
Prudent investors can monitor for opportunistic pullback at the $36.89 fib, $35.42 fib, $32.78 fib, $31.99 fib, and the $30.93 fib. Upside trajectories range from the $45.45 fib up to $56.75 fib.