Yelp, Inc. (NYSE:YELP)

Pick based on Trefis analysis as of 2/7/13

If this Company doesn't upgrade their service it will be soon in bankruptcy, Facebook is really affecting them!

I use Yelp all the time, always through Google Places. The problem is that place apps with crowd-sourced reviews are a fairly commoditized service, so there are no margins in it. Yelp's dependence on Google (their biggest competitor and their biggest partner) looks dangerous, like Zynga's dependence on Facebook.

Although I use Yelp pretty much daily, they do not have the sort business model that tends to succeed in the 'pure internet' space IMO. I want them to prove me wrong but I honestly don't think they will.

WIth Facebook coming out with Nearby and Google having plenty of data and content with Zagat's, Yelp is going to have plenty of stiff competition.

I think on-the-street consumer spend decisions are, and will increasingly be, informed by the whipping out of a smartphone and consultation of e-pinion. To that end, victory goes to the platform with the most e-pinion to go around, and local business ad dollars go to the victor. Almost a million businesses around the world have felt compelled to "claim" their Yelp presence so they can respond to user reviews; less than 5% feel compelled to pay Yelp in order to highlight, upgrade, and otherwise "level up" that presence. As it becomes clearer and clearer that Yelp is directly correlated with foot traffic through their stores, I have a hunch that a lot more than 5% of that million will want to "level up"...especially considering how clear it will become that return on their traditional ad-spend (when was the last time you perused a coupon book?) is shrinking fast.

Not to mention: with about 35M user reviews (and counting), Yelp has a heck of a head-start on all the would-be's--its moat is so enviable that even Google, which thinks is can one-up Facebook, tried to swoop in for an acquisition.

YELP has a great business that is growing and it will likely be acquired by one of the larger players who wants to make inroads into the local space.

If you put everything into Facebook at its IPO this is your kind of stock.

I love this service, I use this rather than a pay model like ANGI. I check out home repair folks like plumbers. Restaurants, especially when I am out of town.
This is one of those network effect stocks - the more people who use it the more it helps. I rate item on Amazon and I love screening items with ratings by others. I think free will win out over pay services like ANGI over the long run.

Similar to Facebook - makes no sense to be valued this high.

Yelp! I need somebody!
Yelp! I'll take anybody!
Yelp! Yah know I need someone...
Yellllllllllllp !!!!

The internet companies that fail are those that exhibit two characteristics 1) require minimal start up capital to duplicate (human or monetary) 2) users have nothing invested (typically hours of uploading pics or info). While FB and LNKD may have problems monetizing the captive audience, at least they have one.

The shorts got squeezed, sure 'nuff. But they're still right. No free cash flow means no reason to buy this stock. *Worsening* free cash flow means there's every reason to sell. Underperform.

Groupon, Angie's List, etc., ... same water will sink all these boats.

Yelp is feeling some short term pressure because of lockups expiring, but their last annual report was astounding. They are growing incredibly fast and have a huge moat with the amount of user generated content they control.

Q2 earnings in, and admittedly the revenue looks good. They raised their forecast to $135M - $136M for the year. Cash on hand grew significantly too ($135M compared to $31.7M last year). EPS improved to -$0.03.

However, the company net losses grew 67% ($2M vs. $1.2M) YOY for Q2. Revenue may have grown by 67% YOY, but the sales and marketing expenses grew right alongside with it (65%).

In fact, for the six months ending June 30, 2012, the company's net loss deepened to $11.7M (from $3.8M last year).

Looking at adjusted EBITDA, the picture improves $1.6M, and YELP was able to stick about $1.6M of their $2M loss into depreciation and amortization.

What continues to concern me about YELP is the cost of revenue, and particularly their sales and marketing expenses. It's not unlike the issue that Groupon had: they can grow and grow the top line, but the cost of doing so killed the bottom line.

Despite today's huge run up, I'm holding on to my original downthumb until I see YELP's EPS turn black.

Expansion into Europe was not a good idea during the European crisis of 2012. The fact that the company has yet to post a profit when that decision was made is also not looking very good. Links to Siri and Bing are nice, but Samsung phones are powered by Android. The advertising space is very competitive and targeting local businesses is time, resource, and human power intensive (meaning that it is very expensive).

Yelp! is the next Tech IPO to plummet. Bad business model...did you know they call Businesses listed on their service, out of the blue to say- if they don't pay money, they'll remove their Positive Reviews??? Yikes...Competition will multiply in this space and take Yelp down. It's so ripe for being beaten.

I am a small business owner and would be quickly bankrupt were I so silly with my ad dollars as to buy into such a flawed model. If I have good reviews, why buy the cow when the milk is free? If I have bad reviews, why highlight my presence on Yelp? It's expensive and a lose, lose proposition for their core small business market. I can personally attest that their strong armed sales tactics and outrageous pricing have been the subject of much ridicule at our local Chamber of Commerce. This is the view from the ground. Anyone buying this stock has their head in the clouds.