Yelp Inc. shares dropped as much as 16 percent in extended trading yesterday after the local-reviews company forecast fourth-quarter sales that fell short of analysts’ estimates.

The stock declined to as low as $58.72 after the San Francisco-based company said in a statement that revenue would be $107 million to $108 million for the current period. That was below the $111 million estimated on average by analysts, according to data compiled by Bloomberg. Yelp shares closed yesterday at $70.23 in New York.

For the third quarter, Yelp posted revenue of $102.5 million, up from $61.2 million a year earlier. Net income was $3.6 million, compared with a net loss of $2.3 million a year ago.

Yelp, which provides local user reviews of everything from restaurants to hairdressers, is facing increased competition for local online advertising. To rev up growth, the company has been expanding internationally into markets including Chile and Hong Kong.

“Their guidance was light for the quarter, but still strong,” said Kerry Rice, an analyst at Needham & Co., who has a buy rating on Yelp. “Local advertising is still the key driver in the business.”

Yelp said that it continues to engage users. Consumers contributed 5.3 million reviews, the biggest quarterly increase to date, with about 45 percent of new reviews coming from mobile devices, the company said.

“As we look to the future, we’ll continue to engage our community, develop new ways to show businesses the value Yelp provides and expand and deepen our geographic footprint,” Chief Executive Officer Jeremy Stoppelman said in the statement.

To contact the reporter on this story: Denni Hu in New York at To contact the editors responsible for this story: Pui-Wing Tam at

Tags: earnings, ugc, yelp
Photo Credit: The logo of the online reviews website Yelp is shown in neon on a wall at the company's Manhattan offices in New York. Kathy Willens / Associated Press