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Yelp Inc. (NYSE:YELP) – A Strong Potential for Growth

Tomahawk, WI 8/06/2013 (Basicsmedia) – Yelp Inc. (NYSE:YELP) had recently been growing as one of the favorite destination for advertisements for the local businesses which had further been proved by the quarterly results. A Nielson survey had further added on to this attraction through the positive opinions reported from the respondents. Yelp had primarily been focusing on providing a platform for the advertisements and reviews related to the local businesses, retailers, home service providers, restaurants etc and had been generating revenue from such advertisements by charging a cost for thousand impressions as subscription fee from the local businesses which featured their advertisements on the platform.

Second quarter results

For the 2Q2013, the San Francisco, California based company had reported that the mobile application of Yelp had been used by around 10.4 million unique devices on a monthly average basis. The cumulative reviews for the quarter ended on June 30, 2013 had increased by 41% to levels higher than 42.5 million. Further, average monthly unique visitors for the quarter had increased by 38% over the same quarter of previous year and active local business accounts had increased by 62% to around 51,400 firms.

Further, Yelp had reported a whopping 400% increase in the adjusted EBITDA for the quarter, which ascertains that the company would soon report profits from its business operations. The net loss for the 2Q2013 was reported to be narrower at 1 cent per share, with an increase in sales revenue by 69% to be at $55 million for the period. Yelp had forecasted sales for the third quarter to be in the range of $58 million to $59 million, while analyst estimates are at a consensus of $57.43 million. The full year financial guidance had also been increased by the company to be in the range of $222 million to $224 million, from the earlier range of $216 million to $218 million.

Nielson Survey on Yelp Platform

In another survey presented by Nielson, it had been reported that around 82% of the users who visit the page of Yelp come with the stern intention of buying a product or service. Further, it had been reported that 98% of the users of the Yelp platform had definitely made at least one purchase from the products advertised on the page and around 89% of them had made their purchases within a week of visiting the Yelp page.

eCommerce Platform

Yelp had also been making many value additions to its web page to attract more users to the site and to increase the convenience and comfort of such users. Recently in July 2013, the company had introduced the Yelp platform which had added a consumer purchasing feature to the site. This platform aimed at converting the company’s page into a more transaction based eCommerce platform had been launched presently for the food delivery services advertised on the web page and the service is limited to the geographical regions of San Francisco and New York. Yelp is further planning to partner with the outside service providers like Eat24, delivery.com etc to expand such eCommerce services to other verticals on the page and to broader geographic areas.

All such business developments reported by the company had made the stock of Yelp to soar to new heights in the recent trading sessions and presently the shares are trading at 270 times the earnings estimates for the FY2014. Given such heavy surge in prices, it would prove efficient to the investors to wait for some time so that the stock cools down before making any move on the shares of Yelp Inc. As the business potential for the company had been highly ascertained with its recent quarterly results and forecasts for the future operations and with the new value additions being made by the company at regular intervals, Yelp Inc. possesses strong potential to grow to higher price levels in the near future.

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Mystic Maggie

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