Updated from 9:39 a.m. EST to include opening price.NEW YORK ( TheStreet) - Yelp ( YELP) may get a short term pop after it opens for trading, but longer-term,investors may want to stay away, as the company is still unprofitable eight years after it was founded. Yelp, which compiles reviews for local businesses, has seen its revenue grow sharply, from $25.8 million in 2009 to $83.3 million in 2011, an increase of nearly 300%. Losses, however, have continued to grow.
At nearly $900 million, Yelp will start trading at ten times revenue. Conversely, Google trades at six times trailing-twelve-month revenue and is highly profitable. Even Groupon ( GRPN), which came under criticism for its accounting-methods and low barrier to entry, trades at six times trailing-twelve-month revenue. "Yelp is selling at the highest multiple to sales to its competitors, which is a serious metric that has to be looked at," Sweet said on the phone. "Yelp is selling at nearly double what Google is." Yelp was competing with Groupon in the "daily-deals" space, but left that market in 2011, along with Facebook, as revenue growth slowed. Yelp priced its IPO last night at $15 per share, above the expected $12-$14 range, indicating the high interest in the offering. 7.15 million shares will be sold in the offering, raising $107 million. It will trade under the ticker symbol "YELP" on the New York Stock Exchange. Yelp shares opened for trade at $22.00 per share, and are currently trading at $24.64, up 64.27% from their IPO price.
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