Looking For Yelp IPO Gains (YELP, ANGI)

Yelp Inc. (NYSE: YELP) is set to debut in trading late this week for its initial public offering of 7.15 million shares in a price range of $12.00 to $14.00.  The company’s roadshow was meant to show continued growth ahead, but the weekend version of the Wall Street Journal said that its business model is a worry and that it cannot maintain its growth rates.  Still, the WSJ also conceded that shares were likely to pop on the first day of trading.

This is one of our own Top IPOs To Watch In 2012. Yelp’s total Class A and Class B shares outstanding after the offering will be 59,873,181 shares.  Our concern is not on the growth ultimately slowing as much as it is on the limited say that new investors will get in voting rights.

The lead underwriters are Goldman Sachs, Citigroup, and Jefferies; co-managers are listed as Allen & Company and Oppenheimer & Co.

The high-end of the IPO price range generates a value of about $840 million.  Yahoo! Finance currently has a value for Angie’s List, Inc. (NASDAQ: ANGI) at $652 million and we see the Yelp valuation potentially reaching much higher than Angie’s List as of today.

Each new IPO allows yet higher valuations of new companies in the sector.  It is ultimately called price discovery.

JON C. OGG