Yelp Inc. is under pressure again from an activist investor to sell the company — which is not a new story and may face the same roadblock as previous efforts.
Eric Semler, the chief executive of TCS Capital Management LLC and a top Yelp investor who is stirring up the pot, said that he believes Yelp YELP is actually doing well, and pointed out that the review site has had eight consecutive quarters of double-digit revenue growth and its home services is now growing faster than its core restaurant business.
TCS Capital Management issued a scathing letter to Yelp’s board of directors Tuesday, expressing “serious concern and disappointment with the abysmal performance of Yelp’s stock price and to demand that the board immediately explore strategic alternatives.” TCS said it owns 4% of Yelp’s outstanding shares, and is one of the company’s top five shareholders.
“Longtime Yelp followers may recall that this occurs roughly every four years,” wrote Justin Patterson, an analyst with KeyBanc Capital Markets. One of those efforts was in 2015, when Yelp hired Goldman Sachs to find a buyer, but decided not to pursue a sale. And in 2019, another activist, SQN Investors LP, agitated for change and for a sale of the company. In 2019, Yelp replaced three board members and initiated stock buybacks, and has since added two more directors.