Yelp Inc (NYSE:YELP) has decided to end a process that would have seen the firm sell itself according to a report released in the middle of the day on Thursday. Shares in the local reviews firm were crashing on the market after the news broke, with sellers worrying that the firm will not be able to make it alone.
Bloomberg reported on Thursday afternoon that its sources said that the CEO had potential offers, but decided not to pursue a sale. Rumors were spreading that the real reason for the stall was that there was no buyer willing to take Yelp on. Shares in the firm had lost more than 11% of their value at time of writing, and were continuing to drop as the news spread around the market and caused those betting on a sale to abandon their place in the firm’s stock.
Yelp can’t sell itself
Just before 1 PM today shares in Yelp began to tank and trading was halted. After a 10 minute break, trading resumed. The chance of selling the firm is now gone. Sources told Bloomberg that its CEO had had a change of heart about the sale, and had decided to continue forward as a discrete firm instead.
That’s an odd decision for a firm that decided to sell itself because it was unable to make money from its large user base, and unable to compete on the same terms as Google and Facebook. While Google uses its search results to skew business away from Yelp, Facebook has been quietly building its own alternative to the firm’s service.
Both Google and Facebook were listed by Piper Jaffray in a May 8 report on the sale of the firm. Piper Jaffray added that it thought Apple could also be ready to make a bid for the firm. Goldman Sachs was in charge of the sale, but was apparently unable to convince any of those firms to make a worthwhile bid for Yelp.
Yelp loses sale momentum
When Yelp announced it had plans to sell itself shares in the firm popped as traders looked to get a premium on the sale price. In the months since all of that momentum has been lost, and the firm’s shares are hitting new lows today as a result of the abject failure to sell.
Shares hit a low of $37.50 on today’s market right after trading in the stock resumed. Wall Street has not had a chance to absorb the news and give new ratings on the firm since the news was revealed, but in the coming hours some analysts should be able to give their view about the position of the firm before the stock market closes for the long July 4th weekend.