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Facebook And Yelp Remain A Good Bet Despite Recent Price Tumbles

Nov 25 2013

Yelp Helps Memphis

Yelp Helps Memphis (Photo credit: Yelp.com)

Facebook And Yelp Remain A Good Bet Despite Recent Price Tumbles

Facebook shares have taken a tumble recently along with a number of other of the so-called momentum stocks including Yelp (-6%), Twitter (-4%), LinkedIn and Trulia. Facebook dropped sharply (4%) and fell through the $45 mark for the first time in over a year. This comes at a time when most of these stocks have been enjoying earnings growth and holding a strong balance sheet with cash on hand.

It should be remembered, however, that the momentum stocks have enjoyed a stellar run on the US stock markets (riding on the overall market) over the past twelve months and perhaps some investors are considering the implications of the dangers of the fast moving tech market where technology and trends can change the landscape overnight. What, for example, are the implications for Yelp coming under Facebook's umbrella (which already has a proven review system) and both companies' valuation?

Yelp, however, does have a much stronger presence in the mobile market (with a strong mobile app) that could enable it to be less reliant on Google search results. Many analysts are also positive on Facebook's prospects in the longer term. Some analysts have suggested the company could be a $55 stock as their revenue builds to a projected 2bn by 2017 if current trends continue.

Overall, the tech sector looks like a healthy bet in line with the overall market's performance but it is subject to its own fluctuations as well. So, despite their recent falls, the so called momentum stocks remain a good bet on companies that have managed to make social pay.

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