Yelp’s IPO at $900 million

Yelp’s IPO values the online-review company at $900 million

Yelp Inc., known for its online reviews of eateries and a wide variety of shops and services, debuts on the New York Stock Exchange on Friday, with its initial public offering of stock priced at $15 a share.

The offering could raise as much as $123 million before expenses. It values Yelp at $900 million.

That’s a lot for a company that hasn’t turned a profit since its 2004 founding. Rick Summer, an analyst at Morningstar, said that even though Yelp is at “the head of the pack” compared with other review sites, he’s concerned that the company might not be able to generate enough revenue to “justify the expected price of this IPO.”

Though best known for restaurant reviews, Yelp makes money from advertising, with most of the ads coming from local businesses its users review. In 2011, it booked revenue of $83.3 million, up 74% from 2010.

But it racked up a loss of $16.7 million last year and $9.6 million the year before.

Like many startups, Yelp originated as a solution to a problem. Jeremy Stoppelman co-founded the company with former PayPal colleague Russel Simmons. Stoppelman wrote about Yelp’s beginnings in an op-ed article printed in the San Francisco Chronicle in 2009.

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