5 Reasons to Short Yelp Stock
Yelp has an amazing robust review system for consumers, but it monetizes this system through a mediocre advertisement platform. Under-delivering to advertisers, reliance on poorly-trained sales personnel and COVID-19 influence on small businesses advertising budget is likely to push stock price from $20.40 on April 28th to $10-12 by the end of the year.
Yelp revenue is heavily impacted by Coronavirus.
With restaurants & small businesses closed, shutting down Yelp advertisement is a no-brainer. The stock has already dropped from $37 in the beginning of the year to $20.40 as of April 18th. I can see it dropping further to $10-12 by the end of the year.
Yelp’s advertisement platform is mediocre compared to Google.
First, there is no way to target ad clicks to precise geography. Even if my business serves only New Jersey, a scammer in Pakistan, while looking for painters to scam, will also be presented to sponsored search results, and will be depleting the advertisers’ budget for irrelevant and annoying clicks. Secondly, there is no way to use negatives, to optimize for audiences, to target based on age, gender or income. It’s platform is crap compared to Google.
Yelp nickels and dimes advertisers.
If a business wants to display their license, they have to pay $1 per day, $2 per day to show their portfolio, $2 to add an action button, $2 to hide ads to competitors, and $2 per day to show the highlights such as “minority-owned”, “eco-friendly”, or “open during COVID-19”, etc. Imagine if Google charged extra for sitelinks?
Yelp relies on poorly trained sales personnel.
Instead of investing in their advertisement platform, Yelp relies on poorly trained sales personnel who use a very repetitive and annoying script. I often remind myself that not everyone is at a liberty to choose their job or freedom to perform that job well, but even escaping from those calls proves a challenge. If you tell them from the very beginning that you will for sure not spend a single penny with them, they are trained not to take a no for an answer and continue a conversation with you no matter what - even if you tell repetitively that they you are not willing to give them another chance, and even when they do believe you. Today I also enjoyed their closing pitch - “a year from now you will look back and see that you missed an opportunity to earn maybe $50 000”. I could not get that statement in writing. Also for some reason, they finally hanged up on me when I asked not to call me ever again.
Yelp has terrible customer service.
When you call them to report an issue with their advertisement (I had tried to advertise “to get clicks to my website”, but my Google Analytics was not registering any clicks), I was told that this was not how their system worked, that all clicks were to my Yelp page, not to my website, when I pointed out that I had specifically chose “click to my website” option in their advertisement platform, the representative continued to deny this and just hanged up on me. When I called Yelp back to report this again, I was told that someone would give me a call. Three weeks have passed, I paused all my adds with them, but have yet to hear back from them.