another ipo, another success story… sort of. it’s hard to ignore the 70% ipo pop in $YELP stock save for the fact that after eight years this company continues to lose money. not that it matters when their strategy is defenseless and business model fucked.
throwing mud on the wall to see what sticks may be an understatement for yelp, which has gone after checking-in (foursquare FTW), deals (groupon and living social FTW), you name it. all have failed, leaving the company with just its core product. a core product which has crazy competition, such as google.
as you may recall, i’m a believer in execution above all else, and having a big competitor out there doesn’t mean imminent doom. yet, with yelp relying so heavily on search traffic and google increasingly directing / promoting traffic to its own properties, yelp’s reliance on google to play nice is precarious at best — particularly when you are but a small company with insignificant revenues and growing losses.
with so many bearish stories on the ipo, the contrarian in me wants to look for the silver lining… to that end, businesses still gain extreme value from positive and prominent visibility on yelp and will continue to pay for add-ons and such that drive traffic to their establishments. plus, i have to remind myself that i am an early adopter web geek, and the masses may still use yelp for a long while, even if i don’t anymore.
for me, the next stage of discovery is foursquare. the interface, experience, and recommendations are far better than what i get at yelp. just check it out for yourselves.
all i can say for now is congrats to yelp for a successful ipo and the many newly minted millionaires. though i think they amped up marketing and product spending just to be able to sell a decent revenue story to prospective buyers, they did get the job done. there is nothing new to this strategy; rather how the game is played when you’re weak. just ask angie’s list ($ANGI) how it worked out.
(un)fortunately my brokerage doesn’t yet have any $YELP shares for me to borrow… after the ipo hysteria subsides (unlikely until facebook’s ipo), i plan to short this stock down to $0.