Does Yelp’s Debut Mark Turning Point in Tech?

Yelp (NYSE:YELP) priced its initial public offering at $15 per share on Thursday, the price at which the company has already raised $107.25 million, valuing it at $898.1 million. The stock makes its market debut Friday, when its market performance will be highly scrutinized, as the IPO acts as a  barometer of investor interest in technology stocks.

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The company’s business model, which spans markets in North America, Western Europe and Australia, involves offering an inventory of local business pages and user-generated reviews for free to some 66 million users a month. Revenues are generated through advertisements by businesses and payments for extra features on their Yelp pages. The company reported $83.3 million in revenue and a net loss of $16.9 million last year.

“The revenues are excellent right now, but their losses are high,” said Scott Sweet, a managing partner of IPOboutique.com, an advisory firm. The company has not made it into the black after eight years of strong business. “My primary concern is the current competition and the new players that will enter this space,” said Sweet.

Yelp is selling 7.15 million shares in its initial public offering today, none of which come from Jeremy Stoppelman, its Chief Executive, or other large shareholders. However, Yelp Foundation, a non-profit arm, will be selling 50,000 shares.

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To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com