Dropping out of Harvard Business School and disregarding advice from Elon Musk were just two decisions along the path to success for 35-year-old Jeremy Stoppelman, the founder and CEO of Yelp Inc (NYSE:YELP). This Fortune Magazine profile of the ambitious, J. Crew-loving foodie also notes how Stoppelman has turned down buyout offers — the most recent of which was for a cool $1 billion.

“Despite a robust user base, an international footprint, and an aggressive push into advertising sales,” the article notes, “Yelp… has yet to turn a profit.” Stoppelman is not looking for a “quicker path” to improve Yelp’s bottom line, though, and is decidedly committed for the long haul. Recently, Yelp introduced its first e-commerce offering — Yelp Platform — which allows customers to order and pay for services directly through the Yelp website or mobile app. Mobile advertising will also be key in Yelp’s quest for profitability, but some believe the company “waited too long on mobile advertising,” potentially losing ground in a fiercely competitive space.

Contrarian Perspective

YELP shares have had a stellar year, gaining close to 250% in 2013 and touching a new all-time high of $73.45 just last week. Even more recently, the shares bounced off support from their 40-day moving average, which hasn’t been violated on a daily closing basis since early June. What’s more, in the last three months, YELP has outperformed the SP 500 (INDEXSP:.INX) on a relative-strength basis by 61 percentage points.

On the fundamental front, YELP got within a whisper of profitable territory last quarter, posting a second-quarter loss of a penny per share as revenue surged 69% to $55 million. Both numbers topped analysts’ estimates, and the stock surged 23.2% the following day.

Despite this backdrop, YELP still has plenty of skeptics in its midst. For example, the number of shorted YELP shares spiked by 15.4% to 7.5 million during the last biweekly reporting period, and now represents almost 20% of the stock’s float.

Also, the equity’s 10-day put/call volume ratio tracking activity on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) totals 1.08, revealing that in the past two weeks, puts have been purchased to open at a slightly faster pace than calls. This ratio is 2 percentage points shy of an annual high, suggesting long puts have hardly been in greater demand (relative to calls) during the last year.

Finally, although the brokerage bunch is beginning to come around to the bullish side, 10 of the 19 analysts following YELP still deem it worthy of a tepid “hold” rating. The consensus 12-month price target of $54.50, meanwhile, sits solidly below the stock’s current price of $66.17. As the stock continues to advance, future upgrades and/or price-target hikes (or capitulation from the bearish investing crowd) could perpetuate buying demand on the shares.

This article by Beth Gaston was originally published on Schaeffer’s Investment Research.

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