Yelp sets IPO price target, could raise $115 million

By msnbc.com staff

Online review site Yelp has set a price target for its planned public stock offering, which could raise as much as $115 million in what would likely be the first IPO for a major Internet company this year.

Based in San Francisco, the user-generated review website said Thursday it plans to sell 7.1 million shares for $12 to $14 each, while its charitable foundation will sell 50,000 shares and investment bankers have the option to sell an additional 1.07 million shares.

Michael Pachter, director of equity research at Wedbush Securities, sees the potential for strong upside growth for Yelp.

A fraction of the businesses listed on the website have actually formed an official partnership with the company, he said -- that’s 16,000 businesses out of 20 million listed.

“It tells me there’s a huge upside if these guys are successful at getting businesses to see the value of being listed on the site and having reviews, but they are in their infancy [now],”Pachter said.

“They have 66 million unique visitors. That customer list is worth a ton. I see the value in what they do and I see how hard it’s going to be to replicate,” he continued. “I think they are very much like Yahoo was with search. It became synonymous with search, and Yelp is synonymous with recommendations.”

Yelp filed registration documents to go public three months ago, and now looks to be within weeks of its first stock offering, as IPO pricings usually happen a few weeks before a company enters the public markets. The company’s shares will trade on the New York Stock Exchange under the ticker “YELP.”

Yelp could raise less money in its IPO, as it depends on investor demand and appetite for shares. However, the stock offering is sure to draw investor interest, as it will likely come ahead of Facebook’s planned public stock offering. The largest social-networking website filed papers earlier this month for a $5 billion offering.

Yelp’s IPO is part of a rash of Internet offerings over the past few months. So far, social media companies Groupon, Zynga and LinkedIn have made their stock market debuts, with mixed results.