Yelp may be derailed by a turbulent stock market and a growing sense among investors that the IPOs of young social-web startups may not be such hot investments after all.
Unlike Yelp the company, “yelp” the word dates back to the 1500’s, when its original meaning was “boasting“. Over the years, it came to mean something quite different: “A short, sharp cry, especially of pain or alarm” as the Concise OED puts it.
That downward trajectory seems to be playing out over a much shorter time span as Yelp the company gets ready to go public. Founded in 2004, Yelp soon sprinted past Citysearch as the premier site for customer reviews of restaurants and local businesses. The company reportedly spurned a $500 million offer from Google (GOOG), only to file for an IPO that could value the company at $2 billion. That wold give Yelp a lot to boast about.
But that outcome may be derailed by a turbulent stock market and a growing sense among investors that the IPOs of young social-web startups may not be such hot investments after all. Groupon (GRPN), the leader in the group buying market, and Angie’s List (ANGI), another user-review site that recently went public, fell last week, suggesting the appetite for tech IPOs may be waning. (Facebook, which may be targeting and April 2012 IPO, is in a category by itself.)
In the three and a half days of trading last week, Groupon’s stock fell 36% to $16.75, well below its $20 offering price. Angie’s List fell 15% to $13.50, or 50 cents above its Nov. 16 offering price. Other IPOs in the class of 2011 fared poorly as Pandora (P) stock fell 16% and LinkedIn (LNKD) dropped 12%. The Nasdaq Composite, by contrast, declined 5% in a market jittery about the financial turmoil in Europe.
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