Yelp YELP, the platform synonymous with connecting users to local businesses, has seen its shares plunge 12% over the past year. This underperformance compared with the Zacks Computer and Technology sector's 33.5% return and the Zacks Internet – Content industry’s 13.8% appreciation highlights challenges stemming from softness across its restaurant and retail business segments and rising competition.

YELP has also underperformed its industry peers, RELX Plc RELX and Opera Limited OPRA. Over the past year, shares of RELX and OPRA have soared 16.2% and 47.9%, respectively.

Yet, beneath the surface, Yelp’s strong fundamentals and innovative product initiatives make a compelling case for buying the stock now.

Yelp’s high-margin, capital-light business model remains a key strength. The company’s strong brand recognition keeps it afloat in a competitive market where platforms like Instagram, operating under Meta Platforms META, and TikTok are vying for user engagement. Unlike social media platforms, Yelp’s targeted ad products and tailored user experiences provide measurable returns on investment for advertisers.

Yelp Inc. Price and Consensus

Yelp Inc. price-consensus-chart | Yelp Inc. Quote

Yelp’s Strategic Focus on Ad Innovation

Yelp's latest product launches prioritize full-funnel advertising solutions, which aim to boost awareness and conversions for advertisers. These efforts could lead to increased ad spending, better revenue growth and higher margins. Additionally, its focus on the high-growth home services segment strengthens its long-term revenue outlook.

In January 2025, Yelp revealed its end-of-year product release, which includes more than 20 new features aimed at improving the user experience for both customers and entrepreneurs. AI-powered features in Yelp's most recent product release include Review Insights, which highlights reviewer sentiment for popular subjects, a personalized home feed with even more user content, and improvements to Yelp Assistant, the AI chatbot that pairs customers with customer support experts.

Additionally, YELP revealed AI-powered enhancements to the business owner experience, including a smart selection tool that automatically optimizes ad performance and job summaries that assist in managing their inbox.

Yelp's initiatives to improve user engagement through innovative product development could aid in reversing the downward trend in monthly active users. If successful, these efforts could boost Yelp's user base and solidify its standing as the premier source for reviews and information about local businesses.

Analysts are optimistic about the company’s near-term prospects. The Zacks Consensus Estimate for 2025 revenues and EPS depict a year-over-year increase of 5.1% and 28.3%, respectively. Yelp has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, the average surprise being 143.7%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zacks Rank

YELP sports a Zacks Rank #1 (Strong Buy), implying that existing investors should keep on holding the stock while new buyers should accumulate the stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

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