Yelp is in big trouble if it can’t reverse its losses

A year ago, Yelp was making a small but still respectable $2.7 million profit, but that number has transformed into a $1.3 million loss. Even with the company raising its revenue by more than 50% year-on-year and increasing the number of reviews posted to its service by 35%, Yelp is still losing money. Investors are no longer confident in the company’s ability to make money and this is causing Yelp’s stock price to plummet. 

Yelp is in full crisis mode as the upstart’s chairman is out – and its stock continues to free fall. The reviews website, headquartered in San Francisco’s startup land, announced on Wednesday that a modest $2.7m profit in the second quarter of 2014 had turned into a loss of $1.3m in the second quarter of 2015. This is despite Yelp raising revenues by 51 per cent, year on year, to $133.9m, and increasing the number of total reviews by 35 per cent over the 2014 quarter. Net loss for the first two quarters of Yelp’s 2015 fiscal year now sits at $2.6m. The same six months in 2014 had Yelp at $100,000 in the black. Yelp’s second quarter ended June 30. Investors were not thrilled with the results, to say the least. As of 12:45PM Eastern time, the New York Stock Exchange reported Yelp shares were down 28 per cent, trading at $24.06, compared to yesterday’s $33.51 closing price.