Tag Archives: request

Yelp Downgraded On Slowing Growth, While Competition Mires Groupon

Yelp ( YELP ) and  Groupon ( GRPN ) got hit with bearish analyst reports Wednesday, but  Angie’s List ( ANGI ) got a more positive note. Yelp stock dropped Wednesday after the consumer review website was downgraded to sell from neutral by investment bank UBS. Yelp stock was down 2.5% in afternoon trading in the stock market today , near 20, and has tumbled more than 55% in the past 12 months. UBS cited concerns over the potential of product innovation taking a hit as user growth declines. “Yelp will enter a period of slowing revenue growth and heightened margin pressures, driven by increased competition in Yelp’s core business and share gains by larger digital ad companies,” wrote UBS analyst Eric Sheridan. Decelerating traffic growth and rising hiring costs in sales and marketing also are concerns, said Sheridan. “An additional worry is the lack of operating profit to re-invest to drive innovation that might counter-act the platform strength of Alphabet ( GOOGL ) subsidiary Google and Facebook ( FB ),” Sheridan said. He added that “the companies which will succeed in the fight for local advertising budgets are those that have established large mobile user bases. In our view, Yelp (despite its efforts) has lagged in user growth, product innovation and necessary tech investments.” Groupon Pressure Mounting Business pressure is also unlikely to ease anytime soon for online daily deals marketplace Groupon, Sheridan said in another report Wednesday. Groupon stock has plunged nearly 50% in the past 12 months and was down 10.3% Wednesday afternoon, near 4. While showing signs of progress in its transformation to an e-commerce marketplace, Sheridan said, “there is still a long road ahead in strengthening the company’s positioning in the local ad and/or local ecommerce market.” Groupon is being buffeted as Google, Facebook and others “are increasing their efforts to capture local ad dollars, while Amazon.com ( AMZN )‘s same-day delivery service reduces the benefit of a local marketplace,” Sheridan said. Angie’s List Revenue Estimates Hiked Good news came to Angie’s List ( ANGI ) in the form of a revenue outlook boost from Pacific Crest Securities, which praised the online review site’s recent decision to drop its current membership model and replace it with free access to its business ratings and reviews as part of a tiered subscription plan. The addition of the free tier “should reignite user growth,” wrote Pacific Crest analyst Evan Wilson in a research report Tuesday. Pacific Crest upped its 2016 estimate for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for Angie’s List to $34 million, up 58%. “While it’s difficult to model, we think the news of a free Angie’s List will drive an inflection of user traffic and subsequently be much more attractive to service providers,” Wilson wrote. “We think the benefits will accrue fully in 2017, and 2016 has become a tough-to-forecast transition year.” Angie’s List stock was down a fraction in afternoon trading Wednesday, near 8.

Wall Street Banks Declare War On Silicon Valley Mobile Payments

Wall Street banks have declared war on Silicon Valley mobile payments platforms, arming to do battle in the peer-to-peer mobile payments business. As the likes of Square ( SQ ), Facebook ( FB ) and PayPal ( PYPL ) have charged into the uncharted waters of peer-to-peer payments, Wall Street banks have spent five years stitching together an alliance among  JPMorgan Chase ( JPM ), Bank of America ( BAC ), Wells Fargo ( WFC ) and U.S. Bancorp ( USB ) and others,  according to a press release from Early Warning. Early Warning is a real-time payments and authentication firm that will manage clearXchange, a technology that lets bank customers make quick — near-instant — transactions. It now generally takes one to three days to transfer money between banks. Banks had been slow to innovate after the financial crisis, but now “what we are doing now is delivering payments in real time, which is what our customers have asked for,” Mary Harman, managing director for payments at Bank of America, said in an interview with Reuters . The banks are starting to use clearXchange to allow customers to transfer money almost instantly to friends and family. Peer-to-peer payments have been popular among millennials for splitting dinner bills, cab fare and paying rent. Achieving a critical mass fast is important for the banks using clearXchange. The so-called network effects — the value unlocked from having a large customer base — were critical to PayPal’s early success in online payments, for example. PayPal was early to the peer-to-peer market and snapped up the popular Venmo app as a part of its $800 million Braintree acquisition in 2013. Braintree had acquired Venmo in 2012. Last year, Venmo moved $7.5 billion between people, and in January alone it handled $1 billion, PayPal told Reuters. As of Wednesday, only customers at U.S. Bancorp and Bank of America will be able to send money via mobile devices with the clearXchange platform. JPMorgan and Capital One Financial ( COF ) told Reuters they plan to plug in to the platform “later this year.” Citigroup ( C ) is among banks that have not joined the alliance, Reuters said. PayPal stock was up a fraction, near 38, in afternoon trading on the stock market today . The company is an IBD Leaderboard stock. Shares are just below an early entry at 38.62. A conventional buy point lies at 42.65. Square stock was down a fraction Wednesday afternoon, as the company was set to report its Q4 earnings after the close . Investors are likely going to focus on Square Capital, the company’s financial services arm, as an area of growth. Square’s peer-to-peer payments app Square Cash recently added a feature that let customers store money in it, much like a PayPal account already does. Facebook built its peer-to-peer payments play within its Messenger app , and it did so in-house. The company has said Messenger has more than 800 million customers. Facebook stock was up 1% Wednesday afternoon, near 107.

Yahoo Board Nominations Due Soon; Company Prepped For Fire Sale

Yahoo ‘s ( YHOO ) recent writedown of its Tumblr microblog is preparing the company’s core business for sale to private equity firms, possibly at a discount, Rosenblatt Securities said Wednesday. Tumblr revenue did not meet Yahoo’s internal projection for 2015, Rosenblatt analyst Martin Pyykkonen said in a research note. He pointed out that Yahoo’s 2016 guidance for its revenue minus traffic acquisition costs — commissions it pays publishers that run its ads — calls for a nearly 20% decline. “Buyers (with real bids) would have emerged by now if there was strong audience and usage growth to drive advertising demand,” said Pyykkonen, who maintains a sell rating and price target of 30 on Yahoo stock. He said that “Yahoo’s recent writedown of the part of the goodwill on Tumblr is one example of sprucing up the balance sheet for sale of the core business. But we still think it will likely fall short of a premium takeover valuation on Yahoo’s stock.” Yahoo stock was up 0.9% in midday trading in the stock market today , above 33. Yahoo stock has gained 29% since it skidded to a 31-month low of 26.15 last month. But Yahoo stock is down 22% the past 12 months. Yahoo CEO Marissa Mayer is under intensified pressure from major investor Starboard Value, which has urged the exit of Mayer and some directors, as well as the spinoff of Yahoo’s core search business. Yahoo directors are close to offering at least two board seats to the activist hedge fund in order to avert a proxy fight, according to a recent New York Post report. Board member nominations are due by March 26, said Pyykkonen. Dozens of groups are expressing interest in buying the struggling Web portal, say analysts, with Verizon ( VZ ) among those said to be the most likely acquirer. Aside from forming a committee of independent directors to explore possible transactions, Yahoo has announced that it will bring in Goldman Sachs ( GS ), JPMorgan ( JPM ) and PJT Partners ( PJT ) as financial advisors, along with law firm Cravath, Swaine & Moore. Yahoo Faced With Declining Fundamentals Pyykkonen’s report called out the Web company’s “declining fundamentals,” highlighted by drops in users and usage, as well as the Tumblr writedown. Greater revenue concentration from mobile advertising is “benefiting the likes of Facebook ( FB ) and Alphabet ( GOOGL )-owned Google” rather than Yahoo, he said, adding that Netflix ( NFLX ) is also siphoning traffic away from Yahoo. “The fundamental challenge in Yahoo’s core business is the fact that the platform is simply much less relevant to advertisers than it used to be, when it was labeled as a portal, and more recently aggregated content from multiple sources, while producing relatively little of its own unique content,” he said. Comcast ( CMCSA ) is another company rumored to be interested in Yahoo. Verizon has talked up its interest in buying some Yahoo assets “at the right price,” but also said it does not want to “catch a falling knife,” referring to the state of Yahoo’s business. Rumors re-emerged last week that e-commerce giant Alibaba Group ( BABA ) might buy back a 15%  stake that Yahoo now holds in the Chinese company. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $31.4 billion market value as of Wednesday. But some observers say such a transaction is unlikely because of high tax implications.