The Yelp IPO is here and trading at $22 per share! There’s 7.1 million shares being offered in an effort to raise over $106 million. Look for it under the ticker, “YELP” on the New York Stock Exchange. Originally priced at $15 per share, the price is increasing quickly!
You can expect something will have to change at Yelp in order for them to get out from underneath their operating costs. Marketing expenses ate up more than 65% of their revenues last year, and experts say that they don’t see a clear path to sustainability for Yelp yet. So it could be a risky investment, but nothing a lot of organizations haven’t gone through while reinvesting heavily to grow operations.
Here’s an infographic from Statista to help us understand Yelps operations and financials a little better:
Also remember, Yelp depends heavily on Google for traffic. This could be a potentially disasterous situation if Google decides to snub Yelp and promote its own operations, which offers very similar services.
Senior managing partner of IPOboutique.com commented on what he thought about the Yelp IPO and their reliance on Google:
“Although I expect to see a pop at the open due to demand (Yelp was twenty times-oversubscribed), losses will likely continue to grow or come down marginally, and I don’t see it as being a profitable entity. There’s already much competition in their arena, and they need to seriously worry about Google,”
These are words of wisdom. The Yelp IPO is here and currently trading at $22 per share, but be careful. Invest wisely and don’t put all your eggs in one basket. When one goes down another will most certainly go up. Look for these relationships and try to balance your portfolio.