KEY POINTS OF DISCUSSION
- DETERIORATING CORE: Despite what appears to be improving prospects following the last print, the underlying detail behind it suggests that YELP's core Local Advertising segment has taken a material turn for the worse. We're going to delve into the drivers behind its recent trends in account growth and attrition, and assess the prospects of the business into 2018.
- ANCILLARY LINES CAN'T COMPENSATE: Self-serve & National Advertising sound promising at face value, but we suspect they're mostly anecdotal distractions to the core story. We will discuss why self-serve may become challenged for continued growth into 2018, and why we suspect National is never going to take flight. We will also discuss the implications of the GRUB deal and why we suspect it is increasing the overall risk profile of the company/stock.
- ASSESSING THE SETUP: We suspect YELP will struggle to hit 2018 consensus estimates since they do not allow much room for slippage in new account growth and/or imply material improvement in its churn rate. Futher we see increasing risk around the prints as it relates to its net account growth moving forward. We're looking to put the short back on, but we are still working through what we see as somewhat heightened risks on around the catalyst calendar, which we will detail during the call.
Call details will be published Friday morning.
