Here's Why YELP is a Must-Buy Stock Despite 12% Dip in a Year

Yelp's Stock Performance and Challenges - Yelp's shares have plunged 12% over the past year, underperforming compared to the Zacks Computer and Technology sector's 33.5% return and the Zacks Internet – Content industry's 13.8% appreciation [1] - The underperformance is attributed to softness in the restaurant and retail business segments and rising competition [1] - Yelp has also underperformed its industry peers, RELX Plc and Opera Limited, whose shares have soared 16.2% and 47.9%, respectively, over the past year [2] Yelp's Strengths and Business Model - Yelp's high-margin, capital-light business model remains a key strength [3] - The company's strong brand recognition helps it stay competitive in a market where platforms like Instagram and TikTok are vying for user engagement [3] - Unlike social media platforms, Yelp's targeted ad products and tailored user experiences provide measurable returns on investment for advertisers [3] Yelp's Strategic Focus and Product Innovation - Yelp's latest product launches prioritize full-funnel advertising solutions, aiming to boost awareness and conversions for advertisers [4] - The company is focusing on the high-growth home services segment, which strengthens its long-term revenue outlook [4] - Yelp's end-of-year product release in January 2025 includes over 20 new features aimed at improving the user experience, such as AI-powered Review Insights, a personalized home feed, and enhancements to Yelp Assistant [5] - AI-powered enhancements for business owners include a smart selection tool that optimizes ad performance and job summaries to manage inboxes [6] User Engagement and Analyst Optimism - Yelp's initiatives to improve user engagement through innovative product development could reverse the downward trend in monthly active users [7] - Analysts are optimistic about Yelp's near-term prospects, with the Zacks Consensus Estimate for 2025 revenues and EPS showing year-over-year increases of 5.1% and 28.3%, respectively [8] - Yelp has surpassed the Zacks Consensus Estimate thrice in the trailing four quarters, with an average surprise of 143.7% [8]