The Washington Post

Yelp stock jumps in early trading, but is it a sure thing?

The online urban guide Yelp surprised market-watchers Friday morning by breaking out in its first day of public trading and jumping nearly 60 percent to a high of $26 per share around 10 a.m. The company had priced shares at $15 on Thursday night. As of 11 a.m., the company was trading at $24.49 per share.

The company has yet to turn a profit, but that didn’t seem to faze investors who have cooled on other recently public tech stocks such as Groupon and Zynga. Yelp, founded in 2004, was valued at $900 million ahead of its debut.

But Yelp is facing a lot of hurdles. The company’s filing for its initial public offering revealed that its prime competitor — that’d be Google — drives a great deal of its traffic. Yelp reportedly declined a $500 million acquisition offer from Google in 2009 and the rivalry between the two has only gotten fiercer since the Web giant acquired the restaurant review company, Zagat.

There’s also the question of the service itself. Yelp is built on content that relies on the wisdom of crowds, and some listings are questionable. It’s not just business owners (or their friends) propping up their reviews — Yelp says it has measures in place to catch that sort of thing. But if someone writes a review of a local business and, for example, clicks the wrong classification section, it can be difficult to correct the record.

Yelp acknowledged its accuracy problems in its IPO filing, saying that it had filtered about 5 million reviews and removed about 1.8 million to try to keep its site relevant and useful.

Another crowd-sourced review site, Angie’s List, has seen moderate success on the stock market since its IPO in August, but it has made a point of talking about its vetting process and requires a membership.

Related stories:

Facebook files for IPO, plans to raise $5 billion with stock sale

Facebook IPO: A look at what we learned from the filings

Zynga IPO: Shares dip, stabilize in morning trading

Hayley Tsukayama covers consumer technology for The Washington Post.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
What can babies teach students?
Unconventional warfare with a side of ale
A veteran finds healing on a dog sled
Play Videos
A fighter pilot helmet with 360 degrees of sky
Is fencing the answer to brain health?
Scenes from Brazil's Carajás Railway
Play Videos
How a hacker group came to Washington
The woman behind the Nats’ presidents ‘Star Wars’ makeover
How hackers can control your car from miles away
Play Videos
Philadelphia's real signature sandwich
Full disclosure: 3 bedrooms, 2 baths, 1 ghoul
Europe's migrant crisis, explained

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.