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Yelp Enters Brazil – Analyst Blog

Yelp Inc. (

YELP

)

recently launched its services in Latin America. The online
information service provider announced the availability of Yelp
in Brazil, where residents can create accounts on Yelp.com.br to
post their views about local businesses and services.

Yelp’s free application for
Google

‘s
(

GOOG

)

Android and
Apple

‘s
(

AAPL

)

iOS devices will be available to Brazilians. The company
announced that free Yelp for business owners will also be
available to the thriving business community in Brazil.

Brazil is the world’s 7th largest economy in terms of gross
domestic product (“GDP”) and the largest economy in Latin
America. An important member of the BRICS group, the
International Monetary Fund (“IMF”) recognizes Brazil as a part
of the emerging market and developing economies.

Per IMF’s July World Economic Outlook projections, Brazil’s
economy is expected to expand 2.5% in 2013 and 3.2% in 2014.
Although this is lower than IMF’s earlier projections, growth
projections are much better than 0.9% in 2012.

Brazil’s improving economy is expected to boost Yelp’s customer
base. Moreover, Yelp will be available in Portuguese, the
official language of the country, spoken by majority of the
citizens. Additionally, Brazil is set to host two major global
events, FIFA World Cup in 2014 and summer Olympics in 2016, which
present a significant growth opportunity for Yelp.

Although we believe that the entry into the Brazilian market is a
positive move for Yelp, the current sluggish macroeconomic
condition will not boost top-line growth in the near term.
However, Brazil’s low Internet penetration compared to North
America and Europe can be a headwind going forward.

Nevertheless, Yelp will continue to expand in the rapidly growing
markets of Latin America, Eastern Europe and Asia, which will
drive its top-line growth. Currently, Yelp has a presence in 50
international markets.

Yelp expects to continue to invest heavily in sales
marketing and product development (to expand its platform in
mobile applications). The acquisitions of Qype GmbH (Oct 2012)
and SeatMe Inc (Jul, 2013) will further help Yelp to penetrate
new markets going forward.

Although we believe that this incremental spending will hurt
profitability in the near term, the expanding product platform
will help Yelp to capitalize on the significant growth
opportunity from higher ad spending going forward.

Yelp’s increasing mobile penetration (approximately 59.0% of all
Yelp searches were through mobile) will aid the company to better
monetize the platform. Additionally, Yelp’s partnerships with
Apple and
Facebook (

FB

)

are significant positives going forward.

Currently, Yelp has a Zacks Rank #2 (Buy).

APPLE INC (AAPL): Free Stock Analysis Report

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GOOGLE INC-CL A (GOOG): Free Stock Analysis
Report

YELP INC (YELP): Free Stock Analysis Report

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