We have witnessed a “social media boom” the last years. The last “social media” stock is Twitter. Other common social media sites is Facebook (FB), LinkedIn (LNKD), Pandora (P), Zynga (ZNGA), Angie`s list (ANGI), and Yelp (YELP).
Many og these stocks have skyrocketed, and to me it is insane. The highest level for Twitter is $73,31, but are now down -16,01% from the top. Most of you are familiar with Twitter, and some of you are probably using it.
The problem with Twitter is that they are not earning money, so how can investors send the stock price up to $73,31? It doesn`t make sense to me, and remind me of the dot-com bubble from the late 90`s.
Most of the companies mentioned above is ridiculously overvalued. Just like Twitter I mentioned. Many of these companies are short candidates if the major markets tend to retreat. Don`t get me wrong. Yelp have made a fortune for many investors around the world. Yelp is a $5 billion customer review website, and the stock is up a whopping 292,7%. Without earning money!
Yelp is one of the stocks that is pumped up with a hype alone. The companies CEO Jeremy Stoppelman sells his option stocks once he can do that. It doesn`t look good when an insider is selling the companies stock like that.
Analysts expect the earning to be $19 cents a share in 2014. That`s down 21% from $24 cents a share. Despite that, the stock price is going up like never before. New estimates for the stock price is $95.
They have never posted a profit and it is doubtful whether Yelp will ever be a profitable company and they are trading for 336 times its 2014 earnings (the average analysts estimates).
Yelp increased its revenues to $136,50 million (from $83,28 million) and their growth rate slowed to 65%. In 2009 their revenue was $25,81. Analyst expect a growth rate of 57% this year and an average of 40% the next 5 years.
News today: Unemployment Claims & Core CPI at 8:30am, TIC Long-Term Purchases at 9:00am, Philly Fed Manufacturing Index at 10:30am, Bernanke Speaks at 11:10am.
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Ket Garden
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