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Yelp Opens At $22, Which Is Shockingly High (YELP)

Yelp just opened $22 and its moving higher.  It was priced at $15. The valuation is now 20X revenue.  That is very high, says BII analyst Alex Cocotas. Alex is skeptical about the company, which he says has no clear path to profitability. From a report you should read: Yelp's operating losses have barely narrowed in the past year. Given their eye-popping revenue growth, it is worrisome that operating losses still stand at 19 percent of revenue. Why? Largely as a result of its sales and  marketing expense, which ate up 65 percent of its revenues last year (see chart outlining revenue and expense growth to the right). As part of its expansionary growth strategy, Yelp is clearly investing heavily in its sales effort. And so sales and marketing will continue to drag on the company’s bottom line as it invests in the top line.  It is not clear, however, whether they will be able to cut this expense without sacrificing their revenues.  Inother words, there is not a clear path to sustainable profitability (see chart ...
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