Why we aren't applying for this IPO.
The allure of the local advertising market has captured the attention of a host of Internet companies, and Yelp's (YELP) active community of 66 million monthly visitors who have written nearly 25 million reviews of local businesses has put the company at the head of the pack.
However, we are concerned that local businesses may not see enough value in the advertising platform to increase spending and justify the price of this IPO. Perhaps most importantly, the dual threat of Google (GOOG) and Facebook may grab more of the local advertising pie, constraining Yelp's growth and profitability.
Rick Summer does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.