Update, 1/19, 6:10 p.m.: Reached by email a Yelp spokesperson issued the following statement, “We deny the allegations and intend to vigorously contest them.”
Yelp is once again facing the wrath of its shareholders, who slapped the crowd-sourced review website with a fresh class-action lawsuit on Thursday, Fast Company reports. The suit alleges that Yelp misled stockholders about its Q4 2016 financial results and that CEO Jeremy Stoppelman profited off artificially inflated stock prices.
The complaint claims that when Yelp released its Q4 2016 earnings report in February 2017 it “failed to disclose and misrepresented” certain facts related to user and advertiser retention. Those mistakes resulted in slower-than-expected revenue growth; in the aftermath of that Q1 2017 announcement, shares fell by more than 25 percent, according to CNBC.
On top of that, the lawsuit alleges that Stoppelman “took advantage of the artificially inflated price of Yelp stock resulting from the false statements” by selling off roughly 20 percent of his stock holdings — worth $25,630,400 — in the interim period between the February announcement and the Q1 2017 report.
Reached by Eater, representatives from Yelp declined to comment.
The attorneys representing the shareholders, Glancy Prongay & Murray LLP, are currently looking for investors who purchased shares between February 10, 2017, and May 9, 2017 to join the class action, according to a release. Investors have 60 days to join the suit. The suit is demanding a trial by jury, compensation for damages, and attorneys’ fees.
Yelp has faced shareholder lawsuits in the past. In 2015, the company was accused of artificially inflating its stock and deceiving shareholders about the quality of its reviews, but a judge dismissed the case.