Once you dug deeper you discovered that average monthly unique users grew at a much slower pace of 13% year-over-year to 135 million and shrank from Q3's 139 million. It's the first time Yelp has reported a sequential quarter decline in monthly active users . Also, mobile unique visitors was essentially flat quarter-over-quarter.
This is concerning because it signifies that either fresh competition is entering Yelp's turf, or that Yelp is simply doing a poor job of capitalizing on its opportunity to connect consumers to businesses. Personally my biggest qualm with Yelp is that it has a relatively low barrier to entry, meaning any large company could enter the space and potential knock Yelp out of the picture in short order.
I'm of the opinion that the stock at 25 times 2017's estimated EPS is still a frothy valuation and would encourage potential investors to really weigh their risk-willingness before jumping into Yelp.
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The article Is Yelp Inc. Really Worthy of This Upgrade? originally appeared on Fool.com.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool owns shares of, and recommends Apple. It also recommends Yelp. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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