A week after Groupon raised $700 million in its initial public offering, customer review website Yelp has reportedly hired Goldman Sachs Group and Citigroup to underwrite its own IPO.
"Yelp clearly saw the success of Groupon's IPO," said securities lawyer Andrew Stoltmann. "They want to get in while the getting's good."
Yelp's IPO would reportedly value the company at $2 billion, far lower than Groupon's, which pegged the daily deals giant's value at $17 billion.
Yelp has raised more than $100 million in venture capital.
Stoltmann said Yelp was a big name, with little earnings.
"It's another in a long line of IPOs I'd steer clear of," he said. "It's just extraordinarily risky, but there's a lot of sizzle."
Still, like Groupon, the Yelp IPO should be lucrative for those that can get in early.
"With Goldman Sachs as underwriter, I don't think there's any doubt it will be extraordinarily profitable for IPO investors," Stoltmann said. "But those that invest after could sustain losses or at least not get as much pop."
Flybridge Capital Partners' Michael Greeley believes Yelp has a better business model than Groupon. Greeley called the IPO move encouraging, since Yelp had been talked about as a second-tier company -- not a juggernaut like Groupon or LinkedIn -- ready to go public for some time.
"It points to a firming in market sentiment," Greeley said. "We're a long way from a predictable, healthy IPO market, but Yelp is a real company, and scalable."
Greeley said he didn't expect a Yelp IPO until next spring.
"The IPO window is basically closed with Thanksgiving," he said. "There's a little bit of a race to get in there."
