Yelp's stock erased its entire 2019 gain in one day

Yelp posted solid earnings for the first quarter but its forward guidance was unimpressive and led to a rout in its stock price to end last week, erasing all of its 2019 gains.

Details: The company said it anticipates revenue will rise 4%–6% year over year, short of the roughly 6.6% increase investors were expecting. It's also not on pace for the 8%–10% annual increase Yelp predicted in its full year guidance and well short of the mid-teens percentage growth Yelp pegged for 2019-2023.

• Having been a public company since 2012, investors are growing impatient with Yelp's inability to break into the mainstream and grab major chunks of online advertising revenue.

What they're saying:

• Research firm B. Riley downgraded the stock from Buy to Neutral after the earnings report.
• Morgan Stanley, saying there are "not enough customers," reiterated its underweight position.
• UBS called the company "a work in progress" and maintained a less constructive outlook.
• In January, SQN Investors, a major shareholder, urged Yelp to shake up its board of directors, saying their patience had "worn out."

The kind of people who use Yelp are more likely than the average consumer to be influenced by online advertising, research firm Civic Science notes.

• "That means, if Yelp's ad business grows to any measurable scale, they should be able to demonstrate superior effectiveness compared to other platforms," John Dick, the firm's founder and CEO said in a note to clients.

The bottom line: However, the firm also notes in a recent post that Yelp is falling short. "Only 1/3 of Yelp fans say online advertising (in general) guides decisions. When looking at favorability among business owners- more than1/4 have a negative opinion of Yelp."

Go deeper: Yelp's new economic indicator shows a slowdown