Yelp plans $100 million IPO with an Eye Towards Marketing
Steve’s breakdown: It’s not always guaranteed that a company changes/hires an ad agencies after going public but $100 million is a lot of money to play with. I’d keep an eye on these folks on March 1st.
SAN FRANCISCO, CA: Yelp, the user-generated review website, plans to raise as much as $100 million in what may be the first initial public offering from a major Internet company this year.
Yelp said in a regulatory filing Thursday it will offer 7.15 million shares for $12 to $14 each. The pricing is scheduled for March 1, according to data compiled by Bloomberg, and the stock will trade on the New York Stock Exchange under the ticker YELP.
The IPO will probably come ahead of Facebook, which filed to raise $5 billion on Feb. 1, without setting terms. At the midpoint of the price range, Yelp’s offering would value the company at about $778 million, or about 9.3 times last year’s sales. That compares with 5.2 times for Google and 3.8 times for Yahoo, which Yelp lists as competitors in its IPO prospectus.
“The initial valuation seems high relative to their peers,” said Jack Ablin, who oversees $55 billion as chief investment officer at Harris Private Bank in Chicago. “I’m not sure where their huge growth catalyst is going to come from.”
Yelp first filed for its offering in November and is part of a resurgence in Internet offerings, including stock-market debuts last year by Groupon, Zynga and LinkedIn. Yelp’s net loss last year widened to $16.7 million from $9.6 million in 2010, as marketing and product-development spending both increased more than 50 percent. Revenue rose 74 percent to $83.3 million.
About 66 million unique visitors looked at Yelp on a monthly average basis for the quarter that ended Dec. 31, according to the filing. Yelp said it has about 25 million reviews of local businesses, such as dentists, mechanics and salons.
Goldman Sachs is leading the IPO, with Citigroup and Jefferies & Co. helping to manage the deal. Bessemer Venture Partners is the biggest stakeholder, owning 22.1 percent, followed by Elevation Partners with 22 percent and Benchmark Capital with 15.9 percent.
Max Levchin, Yelp’s chairman, owns 13.5 percent of the company, while founder and Chief Executive Officer Jeremy Stoppelman owns 11.1 percent.
The company is selling 7.1 million shares in the IPO, and the Yelp Foundation is planning to sell 50,000 shares, the filing shows. Yelp will use the proceeds for general corporate purposes including marketing and capital expenses.