The company is still not profitable on a non-GAAP basis, but it doesn't matter, as local ad growth continues to soar and the company is taking market share away from other providers, as well as the Yellow Pages, which has seemingly been in a decline for forever.
Not only is the company seeing tremendous demand on mobile, with 40% of ads viewed on a mobile device and 59% of searches coming from mobile, Yelp is expanding into new markets. The company recently rolled out its delivery service, known as Yelp Platform, and the company continues to move further into e-commerce initiatives, something that Jefferies analyst Brian Pitz says "validate[s] the power of the Yelp brand and business model."
Right now, Yelp is going through an incredible, transformative time in its business history, as active local businesses flock to the service, not only because they see a value in having reviews from its customers on its page, but because there is a return on investment from being associated with Yelp.
JPMorgan analyst Kaizad Gotla was forced to upgrade the stock following the quarter, despite the incredibly strong run it has had year to date. "The recent move in the stock has been significant, but we still think there's more upside in Yelp shares," Gotla wrote in his note. "2Q13 results and the 2H13 outlook demonstrate the potential leverage in the model and we think there's still significant room for strong revenue growth and margin expansion." He rates shares "overweight" with a $52 price target.Yelp is dominant on mobile and is only getting stronger as time goes on. That is part of the reason I suggested Yahoo! (YHOO) acquire the company several months ago. It's also largely the reason Wall Street has taken notice, sending shares soaring. YELP data by YCharts
--Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia
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