Yelp IPO Sets Price at $15 Per ShareBy: Shawn Hess - May 2, 2012
The Yelp IPO is on its way and they have set the price at $15 per share, which is a great sign. Initially the stock was expected to trade at $12 to $14 per share, so its priced above target, which is a sign that investor demand is high. The goal at Yelp is to raise $123 million with the offering.
Yelp is a review site based in San Francisco and has been in business for over nine years. Currently Yelp is valued at over $900 million. Though the site booked revenue over $83 million last year, they haven’t turned a profit since they’ve been in business. In fact, it had a loss of almost $17 million last year.
Yelp attracts over 60 million unique visitors every month and is best known for their restaurant reviews, but they cover everything from doctors to floor cleaners. They have also hit pretty big with their mobile optimized reviews (almost 6 million devices search them per month).
According to Yelp’s amended S-1 filing, they plan to offer over 7 million shares of stock with the IPO. Some investors are worried about the true value of a company that hasn’t ever earned a profit. Inc.com has listed 12 things that investors should be aware of with the Yelp IPO.
Take a lok at what Inc.com came up with:
* In 2011, net revenue was $83.3 million; in 2010, it was $47.7 million.
* Significant risks abound: Since the company was founded, it has “incurred significant operating losses.” As of December 31, 2011, the company had an accumulated deficit of approximately $41.2 million.
* The company may be going through somewhat of an identity crisis. “Our business may be harmed if users view our platform as primarily limited to reviews of restaurants and shopping experiences.” Sure, the company has Yelp Deals, but aren’t reviews its core competency?
* It seems the company is fearful of talent-poaching from nearby Bay Area competitors. “We rely on the performance of highly skilled personnel, and if we are unable to attract, retain and motivate well-qualified employees, our business could be harmed.”
* Jeremy Stoppelman, the company’s CEO, will take $300,000 salary.
* Company costs are soaring. In 2011, costs surged to $99.5 million, up from $57.2 million in 2010, driven mainly by a huge boost in sales and marketing ($54.5 million).
* As of December 31, 2011, “approximately 18 million reviews were available on business profile pages, approximately 5 million reviews were being filtered and approximately 1.8 million reviews had been removed from the platform.” In other words, Yelp attracts plenty of reviews, but 10 percent of them are basically spam.
* Unlike Facebook, Yelp needs the dough. Their balance sheet shows they’re running out of working capital, going from reserves of $29 million in 2010, to $19 in 2011.
* Yelp had 66 million unique visitors on a monthly average basis for the quarter ended December 31, 2011, up 67 percent from the same period in the prior year.
* There were 606,000 claimed business locations as of December 31, 2011, up 97 perecent from 2010.
* Yelp recognized revenue from about 24,000 active local business accounts for the quarter ended December 31, 2011, up 109 percent from the same quarter in the prior year.
* The company plans to trade on the NYSE under “YELP.”