Facts

Yelp is an online platform devoted largely to reviews of businesses that has 121 million cumulative reviews through 2016. Its advertising revenues are generated through its local advertisers, national advertisers, and self-serve advertisers. In 2016, Yelp implemented various promotional offers to local businesses, encouraging them to sign up for year-long advertising contracts. On May 9, 2017, Yelp issued a press release announcing lower than expected 1Q'17 financial results and decreased its 2017 projections from a range of $880 million to $900 million to $850 million to $865 million in revenue, based on the churn of advertisers in Q1'17. That same day, Yelp's stock price plummeted from $34.70 to as low as $26.93, a decline in excess of 18%. Both Jonathan Davis and Roei Azar purchased Yelp common stock from February 10, 2017, to May 9, 2017. On January 18, 2018, Davis and Azar individually and on behalf of all others similarly situated in the District Court for the Northern District of California against Yelp and its executive officers, alleging securities fraud. The class included all persons and entities that purchased or acquired Yelp securities between February 10, 2017, and May 9, 2017, and were damaged.

PLAINTIFFS' CONTENTIONS: Plaintiffs alleged that defendants violated the federal securities laws by knowingly and recklessly making false and misleading statements on behalf of Yelp regarding Yelp's weak revenue retention in its local advertising business. Further, plaintiffs alleged that as a result of these materially false and misleading statements, Yelp's securities traded at artificially inflated prices between February 10, 2017, and May 9, 2017, and that plaintiffs purchased and acquired the securities relying on the integrity of the market price of Yelp's securities and publicly available market information. Moreover, plaintiffs argued that the information withheld from the statements was material because a reasonable investor would have considered them important in making investment decisions and that they themselves would not have purchased or acquired Yelp shares if they had known about the information concealed by defendants. Finally, plaintiffs maintained that as a direct and proximate result of defendants' wrongful conduct, they suffered damages in connection with their purchases of Yelp's common stock during the class period.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

$22,250,000 settlement.