Yelp Can’t Shake Class Action Alleging it Misled Investors Over Expected Revenues

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Yelp Investor Class Action Lawsuit Overview:

• Who: Yelp, Inc.
• What: Yelp’s motion to dismiss a class action lawsuit alleging it misled investors has been denied in US District Court.
• Where: Nationwide

Yelp must face a class action lawsuit alleging it made false and misleading statements to investors about its local advertising business, a judge ruled on Sept. 17.

US District Judge Edward Chen denied Yelp, Inc’s motion to dismiss a class action complaint alleging it made false or misleading statements regarding its expected revenues for fiscal year 2017, particularly in relation to its ability to retain local advertisers. 

“The court denies Defendants’ motion for summary judgment because there is a genuine issue of material fact as to whether Defendants made false or misleading statements, with scienter, about Yelp’s local advertising business,” Chen wrote in the order.

The plaintiffs, all investors in Yelp stock, are taking the action against Yelp, Inc., its Chief Executive Officer Jeremy Stoppelman, and two other executives.

Yelp Gave Investors Optimistic Growth Projections, Despite Knowledge of Advertiser Cancellations That Would Impact Business 

Yelp allegedly touted the company’s strong local advertiser retention rate and optimistic growth projections through early 2017, despite knowing a significant number of the local advertisers were canceling their contracts, the lawsuit alleges.

“When defendants made downward adjustments to Yelp’s projections and disclosed those retention problems in May 2017, its stock prices fell.”  

The investors allege that Yelp’s actions violated the Securities Exchange Act.

Meanwhile, Yelp has faced a number of class action lawsuits in the past, including one in 2016 alleging it made unauthorized use of users’ address book data. 

What do you think of the allegations against Yelp? Let us know in the comments! 

The investors are represented by Corey D. Holzer and Marshall P. Dees of Holzer & Holzer LLC. 

The Yelp Investor Class Action Lawsuit is Jonathan Davis, et al., v, Yelp, Inc., et al, Case No. 3:18-cv-00400-EMC in the U.S. District Court Northern District of California

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