A Giants Footprints and Yelp’s Potential Recovery
Despite making a strong recovery from March lows and keeping up with the big dogs in the blue-chip pack, Alphabet has hit a few major hurdles in the back half of 2020. First back in October when The U.S. Department of Justice filed a mammoth antitrust lawsuit against Alphabet alleging unfair business practices and second with two more lawsuits in December of 2020.
Moreover, Alphabet has reported a year-over-year decline in revenue, the first time that’s ever happened in company history, as customers bruised by the pandemic cut advertising spending. With expert analysis indicating that Google appears to have a solid balance sheet with high liquidity, and strong management as well as an innovative company some investors see this dip as the perfect entry opportunity with others still wary of more potential suits.
Yelp is the place millions of people flock towards for restaurant reviews, but due to the pandemic and people eating out less, you may think this would hurt their stock. This does hold some truth with shares of Yelp down 11% year to date. However, Yelps’s third-quarter earnings revealed a surprisingly positive secret.
Yelp only received about 15% of ad revenue from its review service for restaurants and cafes with the “local services” side of the business raking in over 50% of revenue despite being only 10% of the views. With this strong business model combined with vaccination rates rising and a reopening accelerating, Yelp may be in a strong position to make 2021 a green year.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.