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Piper Jaffray Fears 'Bully' Documentary May Harm Yelp's Share Price

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Piper Jaffray Fears 'Bully' Documentary May Harm Yelp's Share Price

Piper Jaffray said Yelp Inc (NYSE: YELP) shares may hit by the "Bully" documentary, which tells the tactics/practices used by Yelp and the impact it has on small businesses.

"While the claims of the documentary have been the subject of scrutiny, traction with Billion Dollar Bully, regardless of validity, could negatively impact Yelp's efforts with consumers and local businesses," analyst Samuel Kemp wrote in a note.

Sensationalized Or Not...

This week, Prost Productions launched a follow-up Indiegogo fundraiser for its production of "Billion Dollar Bully." The March 2015 documentary on the tactics used by Yelp, which included accusations of extortion and review manipulation, got significant media attention and a vocal, media-driven retort from Yelp. The Kickstarter campaign generated $90 thousand in pledges, above the production studio's target of $60 thousand.

Related Link: Some Vetr Members Believe Yelp Shares Could Hit $40 By Next Year

"[W]e believe this follow-up campaign is for some additional content creation and post-production efforts, meaning that the documentary could go live by the end of 2016 or early 2017," Kemp noted.

Kemp said that such a documentary, regardless of truthfulness, has the potential to negatively impact Yelp's brand, marketing efforts with consumers, and sales efforts with small businesses.

Piper Jaffray Rating, Expectations

Meanwhile, Kemp remained Neutral-rated on Yelp as it believes the company will face increasing headwinds from internet verticalization, a slower product evolution to a "tool" based interface, and increasing competition from internet giants such as Facebook Inc (NASDAQ: FB), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Amazon.com, Inc. (NASDAQ: AMZN).

Yelp is expected to announce its second-quarter results on August 8. The Street expects a loss of $0.07 a share and revenue of $169.82 million. Kemp expects a loss of $0.04 and revenue of $170.5 million.

"In terms of Q2'16, we view the risk/ reward as being relatively unattractive. While we do not view Yelp's 2016 guidance as being particularly aggressive, it does assume sustained LSD ARPU growth and relatively strong sales force productivity," Kemp highlighted.

"Therefore, while we do not anticipate a 2H'16 guide down, we do not expect guidance to move higher which, in our opinion, would be necessary to move the stock higher after earnings," Kemp added.

At time of writing, shares of Yelp had gained 0.63 percent on the day to $30.57, while the analyst has a price target of $22.

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Latest Ratings for YELP

DateFirmActionFromTo
Mar 2020CitigroupMaintainsNeutral
Mar 2020Morgan StanleyMaintainsUnderweight
Mar 2020UBSMaintainsSell

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