This stock is up 254% this year. Here's why you should avoid it, say analysts

This stock is up 254% this year. Here's why you should avoid it, say analysts

Social media may have been lighting up lately on everything from the "Breaking Bad" series finale to the turning bad situation in the federal government. But it's social media stocks that have been really lighting up investors' portfolios.

But, as Twitter speeds up its IPO filing process, is it a sign that the sector is at a top? And, what big social media company is most likely on shaky ground?

(Read: Twitter to make IPO filing public this week: Quartz)

As a whole, social media has been a great investment in 2013. Since the start of the year, the Global X Social Media ETF (SOCL) is up 53%.

Some individual social media stocks have done even better than that. Facebook is up 90% in 2013 while professional networking site LinkedIn has given investors 114% returns year-to-date.

However, it's the reviews and recommendations site Yelp that has outpaced them all. Since the start of 2013, Yelp's stock has more than tripled. It's up 254%, doubling since the end of June alone. The company, with nearly $179 million in revenues over the last reported 12 months, has lost $13 million over that time period. Its entire market cap is just over $4 billion, and it's sitting on about $97 million in cash and other liquid assets.

By comparison, Facebook has made $554 million in net income over the last twelve months on $6.1 billion in revenues. Its market cap is $122.8 billion and it has $10.3 billion in cash and other liquid assets. Of course, comparing Facebook to Yelp is like comparing pears to apples (and not the iPod-making kind, either).

So, as investors are shouting for joy this year, will they soon be yelping in pain?

(Read: Touchdown! Twitter strikes a deal with the NFL)

We post that question to CNBC contributor Gina Sanchez, founder of Chatinco Global and advisor of $58 billion in asset allocation program assets.

"Yelp obviously is a startup company," says Sanchez. "And, it trades like a startup company, which means that nobody seems to care about fundamentals."

But, warns Sanchez, those fundamentals will come back to haunt investors, particularly because of the way it pays its employees.

Taking a look at Yelp's charts is Talking Numbers contributor, Richard Ross, Global Technical Strategist at Auerbach Grayson.

"In this business, we say that a rising tide lifts all boats, and that's exactly what's happened in social media" says Ross. "But, Warren Buffet says when that tide goes out, you see who's wearing their bathing suit and I don't think Yelp is one of those companies, unfortunately."

Why do these two analysts say that both the technicals and fundamentals are telling investors to stay away from Yelp now? Watch the video above to see Sanchez and Ross analyze the social media company to find out more.

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