- Company Name
- Yelp, Inc.
- Stock Symbol
- Class Period
- February 10, 2017 to May 9, 2017
- Motion Deadline
- March 19, 2018
- Northern District of California
The complaint charges Yelp and certain of its officers with violations of the Securities Exchange Act of 1934. Yelp is an online review company that provides a platform for businesses and consumers to interact regarding goods and services. Yelp provides businesses with both free and paid services and derives most of its revenue through the sale of advertising.
The complaint alleges that during the Class Period, defendants issued false and misleading statements and/or failed to disclose adverse information regarding Yelp’s retention rates for existing customers and its prospects for 2017 revenue growth. As a result of these false statements and/or omissions, the price of Yelp common stock was artificially inflated during the Class Period to above $38 per share, allowing Yelp’s CEO Jeremy Stoppelman to sell 750,000 shares his personally held Yelp stock (approximately 20% of his holdings) at inflated prices of more than $33 per share for over $25 million in proceeds.
Then on May 9, 2017, the Company announced its first quarter 2017 financial results. While Yelp’s first quarter 2017 revenue and adjusted EBITDA met the Company’s prior expectations, the Company disclosed that it was revising its fiscal year 2017 guidance downward to reflect poor retention rates with existing customers. In a conference call the same day, defendants stated that the “revenue growth across all 3 primary channels . . . decelerated from the prior quarter as well as the prior year,” and the “biggest factor slowing revenue growth w[as] . . . lower account retention in early 2017.” According to defendant Stoppelman, the “decline in retention . . . impacted [Yelp’s] outlook.” On this news, the price of Yelp stock fell as low as $26.93 per share on May 10, 2017 before closing at $28.33 per share, a one-day decline of 18%.