Dive Brief:

• TCS Capital Management, which has over 4% of outstanding shares in Yelp, is reportedly planning to pressure Yelp’s board to seek strategic alternatives, such as explore a sale, according to The Wall Street Journal. 
• The firm’s president and founder Eric Semler plans to send a letter, which was viewed by The Journal, laying out various plans, such as being acquired by TCS Capital Management or entering a tax-free merger with Angi, an online services company.
• TCS Capital thinks Yelp could be sold for at least $70 per share if sold to another technology or media company, or a private equity firm, according to The Journal.

Dive Insight:

A merger between Yelp and Angi could double Yelp’s share value, according to The Journal, and create a huge company within the burgeoning home services market — an area of particular growth for Yelp. 

Earlier this year, Yelp rolled out Yelp Guaranteed, which is expected to provide consumers more confidence when hiring service providers, Jeremy Stoppelman, Yelp co-founder and CEO, said during the company’s May earnings call. Yelp Guaranteed covers several home service company types, including contractors, electricians, landscapers and pest control. 

Advertising revenue for home services grew 25% year over year in Q1, Stoppelman said during the company’s May earnings call. Ad revenue from restaurants, retail and other businesses also increased by 10% year over year.

Yelp has not heard directly from TCS Capital Management “beyond what has been issued publicly,” the company wrote in an email to Restaurant Dive. 

“As always, we welcome constructive input from our shareholders on ways to increase shareholder value,” Yelp said. 

Yelp’s Q1 results also revealed revenue growth of 13% year over year to $312 million, but it reported a net loss of about $1 million, which the company said is consistent year over year, according to the company’s earnings release. The company’s EBITDA grew to $54 million, however, up from $48 million compared to the year-ago quarter. Stoppelman credited the company’s “robust advertiser demand,” as helping drive revenue growth. 

Activist investor activity has been relatively quiet since 2020, but that appears to have changed this month. Earlier in May, Shake Shack made a deal with activist investor Engaged Capital to add different board members and work to improve profitability. As part of that deal, founder Danny Meyer would eventually relinquish his director designation rights as an independent board director.