Yelp stock reacts to weak Q2 guidance, consumer trends

Restaurant and business review platform Yelp (YELP) missed first-quarter estimates on the top and bottom lines, despite reporting a 7% rise in revenue year-over-year. The stock is ticking down on its weak second-quarter forecast.

Morning Brief Co-Hosts Seana Smith and Brad Smith comment on what Yelp's performance indicates about US consumer spending.

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This post was written by Luke Carberry Mogan.

Video transcript

Yelp shares slipping after issuing lighter forecasts for the second quarter, disappointing investors.

The company did see revenue climb 7% from a year ago in the first quarter.

Take a look at shares right now.

They are down by about 1.5%.

1 of the huge things that a lot of investors will remember over the course of this year, this company has had some challenging times.

It's down by about 15.5% year to date at this juncture.

So this just another in the wrong direction right now certainly.

And this is also a continuation in terms of the likely trading action that we've seen for companies that have not exceeded guidance expectations.

So yes, in terms of their most recent quarter, it did come in better than expected, but guidance falling short and we are seeing investors take a bit of issue with that, obviously further pressuring the stock price here today.

But I think also just my takeaway from this is this also highlights the fact that it is a challenging environment here for consumers.

We are seeing people adjust or spending habits when it comes to Yelp.

This is a good, uh, look here into how, how often people are eating out, how exactly they are spending, what exactly they are looking for in terms of some of those ex, um, experience types of offerings here.

And I think it'll pull back even within Yelp's business.

Further highlights the fact that consumers remain under pressure and this is likely going to be a head wind, a challenge here but not only names within the sector but really across industries for the coming quarters.

Yeah, they particularly are looking across a few things, 11 area of strength and momentum right now, in the services category, home services subcategories requesting a quote, they're trying to push more into having the opportunity for you to identify a project and then just connect directly with anyone who might be able to service for that project and uh carry that out as well.

Um So we'll see exactly what type of incremental improvement that offers for the business.

Uh But as of right now, investors not too impressed.