All thanks to the new share offering. Multiply that by 20 and you get a market cap of $5 billion. Yelp is dirt cheap!
Ignore the criminal liar: "Furthermore, if we exclude the $9.33 million received by the company from its sale of additional common stock, it would have been cash flow negative for the year of 2013."
Only idiots don't sell Yelp and buy for the amount shares of Local Corp, before Yelp will buy Local Corp for a quarter billion.
"When we dig deeper into Yelp's numbers, we realize that in order to generate $61.2 million in revenues, the company had to spend $34.12 million on sales and marketing, $11.21 million on product development, $10.54 million on general administrative functions and $4.27 on other costs of revenue. Basically, generating $61.2 million in revenues costs Yelp $60.14 million (it totals up to $62.96 million if we include depreciation and amortization items). Similarly, year-to-date, Yelp spent $169 million in order to generate $162 million in revenues. Between the third quarter of 2012 and the third quarter of this year, Yelp's revenues grew by 68% while the company's operating costs jumped by 64%. This excludes the stock based compensation, which grew from $2.33 million to $7.10 million during the same period.
When we look at Yelp's balance sheet, we see that the company generated only $6 million in free cash flow year-to-date, which compares very weakly with the company's current market value of $4.5 billion. In fact, during this period, the company even diluted its share count from 61.26 million to 65.53 million. Furthermore, if we exclude the $9.33 million received by the company from its sale of additional common stock, it would have been cash flow negative for the year of 2013."
Yeah, but, new share offering isn't part of their core business obviously.
What about their core business? How long will it take for them to get a positive cash flow from that?
I like Yelp, it's on my radar. I'm just concerned that you can't really value it on PE. You gotta kind of gauge growth.