What's Yelp's Problem?Its Business Model

When a fast growing company experiences a slow-down in one quarter, it could be an aberration. But when the slow-down lasts two quarters or more, it could be sign of something more serious -- like a weakness in its business model. That seems to be the case with Yelp. Last quarter the company reported a slow down in monthly unique visitor growth, from 39% a year earlier down to 13%, while total unique visitors fell for the first time on a quarter-over-quarter basis. Now, the operator of a consumer review web platform reported a 3% decline in the average monthly desktop unique visitors, while its revenue of $118.5 million in the last quarter missed analysts’ expectations. And things might get worse going forward, according to the company’s guidance. That’s why Yelp's stock dropped sharply (-22%) on Wall Street, following the release of the company’s financial report. This follows a 19.47% drop in the company’s stock back in January, following its Q4 financial report. Yelp’s Financials as of 4/28/2015