The local-reviews site Yelp today set a price range for its IPO of between $12 and $14 a share in an offering that would value the company at as much as $839 million.
Yelp, which aims to sell 7.15 million shares, is seeking to raise about $100 million. It expects to price on March 1 and begin trading on March 2 under the ticker YELP.
The San Francisco-based company filed to go public in November, with speculation that it would seek a valuation between $1 billion and $2 billion. Yelp has raised $56 million in venture funding to date.
Yelp was founded in 2004 by CEO Jeremy Stoppleman and Russel Simmons, a former colleague at PayPal. The site began on the West Coast but quickly spread. Today, it's one of the most popular sites in the country, where users write reviews of everything from salons and car dealerships to doctors and therapists.
Yelp's traffic is huge, and the rise of smartphones has played a big part of its success. Yelp says it averages 66 million monthly unique Web visitors and 5.7 million monthly unique visitors to its mobile apps. It likes to toss out this factoid: Every second, a consumer generates directions or calls a local business from a Yelp mobile app.
Financially, Yelp's numbers are mixed. Its revenue, achieved by selling ads to local businesses, climbed 74 percent to $83.3 million for the year ended December 31. However, its losses widened to $16.7 million from a year-earlier loss of $9.7 million as total costs and expenses rose. The company said it doesn't expect to be profitable in the near term because it's still focused on investing in the business.
While the company has grown quickly, it has long faced doubts about its ability to survive as a standalone firm, not least because of its prickly relationship with Google. Yelp has repeatedly accused Google of "scraping" its business listings and reviews of restaurants, bars, and retailers without agreement or compensation for use in its own Google Local service. Stoppelman testified last fall before a U.S. Senate antitrust subcommittee looking into Google's power.
In its SEC filing, Yelp said that visitors sent via Google search made up more than half its Web traffic in December, so Yelp's ability to rank high in Google's search results is critical. It also points out a key challenge of competing with Google:
Google has removed links to our website from portions of its web search product, and has promoted its own competing products, including Google's local products.
A successful IPO would be a big victory in many ways. In 2010, Yelp reportedly turned down buyout offers from both Yahoo and Google.
The total offering includes 50,000 shares that the Yelp Foundation is selling. Yelp established the foundation in November.