Yelp Holders Yelping on Wider Loss and Stock Offering

Yelp Inc. (NYSE: YELP) may have the greatest peer-review website out there, but its earnings report is leaving a lot of investors holding the bag after a serious surge. Yelp’s quarterly loss widened out to -$2.3 million. This comes to -$0.04 in earnings per shares (EPS). The loss a year ago was only at -$0.03 EPS and the Thomson Reuters consensus estimate was only at -$0.01 EPS.

An issue that may further cloud the earnings report is that Yelp has telegraphed that it plans to sell up to $250 million in Class A shares.

Where the story gets better is on revenue growth. Sales were up 68% to $61.2 million, above the $59.4 million expected by analysts. Yelp’s SG&A, measuring sales and marketing, were up about 60% to $34.1 million. Monthly unique users rose by 41^ to some 117 million. Business accounts were up 61%. Roughly 42% of ads were served up to mobile devices, and about 62% of the search came from mobile as well.

Yelp offered up guidance for the coming quarter of $66 million to $67 million in revenue versus analyst expectations of about $64.8 million.

Where things get dicey for Yelp is in how much the stock has risen, on top of that stock offering. Shares were up 1.8% at $68.83 at the closing bell versus a 52-week range of $16.32 to $75.37. That is a gain of over 300% from the end of 2012. With a market cap of $4.5 billion at the close, Yelp traded at 20-times expected 2013 revenue ahead of the earnings report.

Yelp’s stock price was already lower by about 2% to 3% after the reported earnings, but news of this stock offering after such a huge run up in price now has shares down close to 6% at $65.30 in the after-hours trading session.