YELP NEEDS HELP
CEO pulls it off market, gets mixed reviews
Talk about a bunch overinflated reviews.
Shares of Yelp cratered 10 percent to a twoyear low Thursday after the popular reviews site for restaurants, spas and stores reportedly suspended a twomonth effort to sell itself with the help of Goldman Sachs.
Wall Street took the news as a sign that cofounder and CEO Jeremy Stoppelman had failed to attract the bids he was hoping for, despite reports that a throng of prospective buyers was circling Yelp.
Among those kicking the tires were Priceline, Yahoo! and TripAdvisor, according to insiders.
Yelp’s stock on Thursday closed at $38.18, giving the company a market capitalization of $2.86 billion — well short of the $3.5 billion to $4 billion that some news reports pegged as a possible buyout price.
“This is like taking the house off the market for six months because it’s going to be embarrassing if it’s sitting out there for another six months,” one skeptical investor said Thursday.
Yelp has “temporarily decided” to halt an auction of the company, Bloomberg reported Thursday, citing unidentified sources. The news service added that Yelp might go back on the block if CEO Stoppelman changes his mind.
A Yelp spokeswoman said the company doesn’t comment on “speculation or rumor.”
Not everybody was buy ing the idea that it was Stoppelman who put a halt to the auction.
In 2009, talks to sell the cultural review site to Google fell apart, with Stoppelman telling the Associated Press that Steve Jobs had convinced him not to sell his “baby.”
It was later reported, however, that it was Google that broke off the talks.
Stoppelman — an original member of Silicon Valley’s legendary “PayPal Mafia” who founded the online payments site more than a decade ago along with the likes of Elon Musk and Peter Thiel — has had a testy relationship with Google.
Indeed, according to one source, the search juggernaut wasn’t participating in Yelp’s auction this spring.
Although Yelp has held its own against Google’s own reviews business, analysts say Google, Facebook and Amazon have all been replicating what Yelp does on their own sites, sapping Yelp’s marketability.
“Google is pushing into local businesses and encouraging them to have their customers leave reviews on Google — a direct competitive threat to Yelp,” notes Victor Anthony, an analyst at Axiom Capital.
“Many of the same restaurants we see on Yelp are also rated on Facebook,” Anthony added. “We are seeing signs that Facebook is moving in the direction of allowing a few key Yelplike features and functionality.”
An acquisition of Yelp might make sense for Yahoo! CEO Marissa Mayer, but a price tag of as much as $4 billion might be a “nonstarter” given Yahoo!’s shaky finances, according to Anthony.