Is an acquirer about to give Yelp a positive review?
Shares of the local-business review site spiked sharply on Thursday, shooting up around 15% in a matter of minutes. Investors were spurred by a report from the Wall Street Journal that the company was exploring a sale. Investors quickly bought up the stock on the hopes that an acquisition would value Yelp well above its current stock price.
However, the WSJ's story, which emerged on Twitter well before being published and after the initial stock price spike, hedged the idea that a sale would happen soon, saying no decision had been made whether Yelp would sell at all.
Those who hold Yelp shares have been hoping for a sale to put them out of their misery. Rumors that Yelp could be up for sale gained significant momentum in late April after the company reported weak earnings and gave an outlook on the rest of the year that came in well below what many had hoped.
That negative outlook sent shares down sharply, with the company losing almost a quarter of its market cap.
Yelp's shares were briefly halted due to the sudden spike, but resumed trading around 1 P.M. EST.
Yelp is one of the more recognizable brands on the Internet, but it has had trouble capitalizing on its sizable traffic and local business information. It also faces sizable competition from other companies -- including Google and Facebook -- that have sought to provide users and local businesses with a way to connect.
In an effort to diversify its business, Yelp had acquired some companies to expand beyond just reviews. It bought startup SeatMe in 2013 and then used it to launch an online reservation service.
Yelp bought online food delivery company Eat24 for $134 million in February, a move that seemed to signal that it was preparing to take on GrubHub.