This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Would Anyone Want to Buy Yelp?

NEW YORK (TheStreet) –– Yelp (YELP - Get Report), the all-purpose local business reviewer, may be the next target for a major technology company seeking to increase its reach with consumers, and that's because of one factor: user-generated content.

In an interview with TheStreet, Zillow (Z) Chairman Rich Barton argued that companies such as Yelp that feature user-generated content (UGC), are very hard to replicate. Once they've won the name recognition battle, more user content prompts begets even more user content.

"The UGC that Yelp has and that TripAdvisor (TRIP) has, those are just dreamy," Barton said in a June 11 interview. "The more content you have, it attracts the more users to it. The more users, the more content. Now you have more content, it attracts more content."

It's a waterfall, made heavier by the fury of social media.

Speculation of a Yelp buyout follows last week's announcement that Priceline.com (PCLN - Get Report) would buy OpenTable (OPEN) for $2.3 billion in cash. That deal prompted attention to turn to OpenTable's competitors, Yelp being chief among them.

The OpenTable deal prompted Yelp to surge on Friday, gaining 14%. Despite the surge, that's still sharply below Yelp's all-time high, set back in early March, when shares peaked at $101.75. Shares on Monday rose 0.4% to close at 71.53.

As Yelp continues to add more businesses and more users to its local-based services, the moat around the company gets bigger, and that's critical to sustaining the businesses, as it uses common language amid original content.

For the first-quarter, Yelp lost 4 cents a share on $76.4 million in revenue, as cumulative reviews grew 46% year over year to approximately 57 million. Yelp noted that active local businesses continue to take to the platform, as there are now approximately 74,000 local business accounts on the service, up 65% year over year.

Yelp's second-quarter guidance was above what Wall Street was expecting, as the company expects sales between $85 million and $86 million, slightly ahead of what Wall Street was thinking, at $85.44 million in sales. The company also bumped up its full year revenue guidance, as it now expects sales between $363 million and $367 million, representing 57% growth.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
AMZN $421.43 -0.38%
OPEN $102.95 -0.02%
PCLN $1,260.00 -0.59%
YELP $38.90 -1.80%
AAPL $125.85 -2.20%

Markets

DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs