According to the Wall Street Journal, online review firm Yelp is putting itself up for sale. The WSJ sources say that Yelp has been working with investment bankers to contact potential buyers over the last few weeks. Analysts have noted that with a current market cap of close to $2.9 billion, the well-known review company could end up valued at more than $3.5 billion in a sale.
One if the sources noted that no deal is imminent, and it’s still possible Yelp BoD will decide against selling the firm.
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
Yelp shares have soared almost 17% to $44.50 on Thursday afternoon on the news of a possible sale.
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Yelp went public over two years ago, and the IPO priced above initial expectations. However, the review firm has slipped from highs in March 2014 when shares were trading up to $97. Yelp’s shares were trading under $39 before news of the possible sale became public.
For Yelp, it’s all about your opinion of businesses. The company has published millions of amateur reviews of shops, restaurants and various other businesses, giving brands a local e-commerce footprint. Yelp makes money from businesses that are willing to pay a premium to raise their profile with premium content and focused advertising.
Yelp is still drawing over 140 million unique visitors a month to its website in the first quarter, based on recent SEC filings. Traffic is up 8% from a year earlier, but growth has slipped, which saw a 30% increase in traffic in the first quarter of 2014. Company execs have also recently announced that said the firm would no longer break out its total visitors numbers, and instead will focus on separate tallies of desktop and mobile users.
Analysts note that higher spending on Yelp’s international sales force in the last few months has not boosted visitors much so far.
Growth issues notwithstanding, Yelp is still likely to be an attractive target to a number of buyers besides online review rivals. A deep base of consumer reviews is an increasingly valuable asset because they take time to amass and can provide a wide range of useful information. Smartphone users are big fans of review sites like Yelp, and a website with many regular visitors leads to more users visiting the site directly, allowing its owner to avoid paying for search engine advertising.