Yelp Files for IPO

Yelp, a site that allows users to rate local businesses, filed paperwork for its initial public offering with the Securities and Exchange Commission on Thursday, according to a BusinessWeek report. The offering is expected to precede the highly anticipated Facebook debut, making it the first major Internet IPO of the year.

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The filing states that Yelp plans to sell 7.15 million shares for $12 to $14 apiece, raising as much as $100 million. The stock will trade on the New York Stock Exchange under ticker symbol YELP.

The proposed offering would value the company at approximately $778 million, which is 9.3 times the company’s 2011 sales. The valuation is lofty in comparison to Google (NASDAQ:GOOG), which offered up a valuation of 5.2 times sales in its initial public offering. Yahoo’s (NASDAQ:YHOO) IPO valuation was 3.8 times sales.

The valuation has many industry experts wondering what the company has up its sleeve, or whether it’s simply deluded. Jack Ablin, a chief investment officer at Harris Private Bank in Chicago, said called the initial valuation “high relative to their [Yelp’s] peers,” adding that he wasn’t sure where their “huge growth catalyst” was going to come from.

Yelp initially filed IPO paperwork with the SEC in November during an IPO boom that included Groupon (NASDAQ:GRPN), Zynga (NASDAQ:ZNGA), and LinkedIn (NYSE:LNKD). The company saw its net losses grow from $9.6 million in 2010 to $16.7 million due to increased marketing and product development, but also saw revenue increase by 74 percent to $83.3 million. Yelp says that it averaged 66 million unique monthly visitors in the fourth quarter of 2011, and has about 25 million reviews to aid consumers in choosing dentists, restaurants, mechanics, salons, and more.

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To contact the reporter on this story: Ashley Cloninger at staff.writers@wallstcheatsheet.com

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