Thursday, September 6, 2012

Yelp Inc (NYSE:YELP) Shares Extend Gains On Optimistic Sentiment

Shares in online review site Yelp Inc (NYSE:YELP) rose 6.3 percent on Wednesday to close at $25.77, with strong volumes that were nearly three times of their average daily volumes. On Tuesday, the stock was up over 10%.

Yelp has been among the few social networking sites that has turned in a stellar performance and which Wall Street is backing.

The stock has seen spectacular gains this year, especially in the last 3 months with a 69 percent rally in its price.

The post-IPO expiry of locked-in shares also did not dent the stock as it passed off without any investors rushing to offload their holdings.

In June the shares in the company dipped in sympathy with what was happening with Facebook, which has seen its shares getting battered consistently.

Will YELP Continue To Move Higher? Find Out Here

However unlike Facebook and Groupon shares, which have dipped below their IPO price, Yelp shares have been trading above their $15 IPO price.

The company's fundamentals are as fine as they could be. In the quarter to June the company reported a 67 percent rise in sales.

Its active local business accounts more than doubled from a year ago. The company guided for 2012 sales of $135-136mm, which represents 62-63 percent growth. This was an increase from prior guidance of $128-132mn. Additionally, the company had been forecasting breakeven adjusted EBITDA but raised it to $2-3mn.

Yelp is a platform that lets users review local businesses and gets its revenues from ads placed by the businesses on its site. The company has been pursuing a mobile strategy since 2006, and it works on all the smartphone platforms, including Apple's iOS. 

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