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YELP’s model showed concerning signs of deterioration through 2017 YTD with both of its net account growth drivers (gross adds & attrition) moving in the wrong direction.  Most of the bulls we speak to are anchoring on YELP’s ancillary businesses/product lines (Self-Serve, National, RAQ) to mitigate core weakness, but those are mostly just extensions of the core advertising business.  We doubt YELP can get to Local Advertising estimates for 2018, and we suspect there is also a mounting risk of printing net account declines within the next 12-24 months. However, we suspect the 4Q17 print will be noisy, which may push out our first catalyst.  Either way, we expect this short to start playing out within two quarters.


Deck & Replay | YELP 2018 Short Thesis - YELP   2018 Deck Image

Let us know if you have any questions or would like to discuss in more detail.

Hesham Shaaban, CFA
Managing Director