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Yelp values itself at a modest $840m

Online reviews site's IPO expected soon

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Online reviews site Yelp priced itself up yesterday for an upcoming, but as yet unspecified, IPO date, modestly telling the markets that its worth up to $840m.

Yelp, which first filed to go public in November last year, is hoping that investors will pay between $12 and $14 for its shares, showing once again that they believe in the power of online advertising to reap profits.

The review site's filing with the Securities and Exchange Commission reports a net revenue of $25.8m in 2009, $47.7m in 2010 and $83.3m in 2011 from local and brand advertising as well as other services.

However, as with so many of the new crop of publicly outing internet firms, the company has yet to turn a profit. Its losses before tax in the last three years have been growing along with its revenues, dropping $2.3m in 2009, $9.5m in 2010 and a sizeable $16.7m last year.

Announcement of a pricing usually indicates that a firm is close to actually going public, putting Yelp onto the market in the midst of the pants-wetting investor excitement over Facebook's IPO, which is due in May or June.

Compared to Facebook, Yelp's IPO is extremely modest - since the social network is expected to pull in a share price that will value the firm at between $75bn and $100bn - but there are still concerns surrounding the issue.

With no profits yet and high sales and marketing expenses, Yelp looks like another Groupon, LinkedIn or Zynga - companies with the potential to make big piles of money, but not a whole lot of evidence of it so far. ®

The smart choice: opportunity from uncertainty

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