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Jacob Steinberg

 
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  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Even Yelp users are turning against Yelp. Look at how Yelp users rate Yelp:

    http://bit.ly/1iVbc9g
    May 23 04:12 PM | Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    1) First, we don't even know if Yelp will ever turn a profit. Second, I only applied the analyst estimates, who happen to be very bullish on Yelp. The same analysts that think Yelp is worth $90 are the same ones that see the company not making much money for at least another decade.

    2) Addressable market for Yelp can be pretty big but how much does that really mean? Addressable market for any company can be big, for example Tesla's addressable market is about $2 trillion. Until now, Yelp enjoyed almost no competition for local ads but now competition is emerging all over the place and so far Yelp failed to generate any meaningful revenues outside of the US. In the US, the competition is getting fiercer everyday.

    3) Yelp has several advantages but it also has some big advantages. Many small businesses absolutely hate Yelp and they think the company is corrupted. There are even ongoing lawsuits and a Google search brings up thousands of related news stories. How much can you grow by making your customers hate you? Second, Yelp's ad rates are a lot higher than Google or Facebook and this is not sustainable in the long run.

    4) The growth in paying business accounts is pretty impressive but all the growth that might or might not happen in the next 10 years is already priced in.

    5) We have no way of knowing how their financials would look like as a mature company. We don't even know how long it will take them to reach maturity. We know a couple things though. First, the company has to grow by about 100% each year for the next 10 years to justify today's valuation. Second, companies like Google were making loads of money even as a start-up company and same goes with Facebook. Yelp is currently losing money on every ad it sells and I don't know if we can excuse them just because they are still growing. Google and Facebook have been able to make loads of money while growing. Yelp's operating margin has been in negative for so long.

    ----------------------...

    Now you help me. How much money does Yelp need to make 10 years from now on when you discount 15% for annual appreciation and 5% for dilution in order to justify today's price? What's the probability that they will actually make that much money? How much downside there is if they fail to meet their goals for just one year? How do you even see any upside in the stock when the growth that may or may not happen in the next decade is already baked in the current price? Also, if Yelp eventually turns out to be profitable, how will it keep more competition from emerging? Margins never stay high long enough because competition always emerges to eat the cake. More importantly, how will Yelp change minds of small businesses that hate it so much?

    It turns out that Yelp users rate yelp at 2.5 and many of them think that the company is corrupt: http://bit.ly/1iVbc9g Of the last 10 reviewers rating "Yelp" on Yelp, 9 gave it a "1-star" rating.

    Yelp has a lot of work to do for the next 10-15 years just to deserve today's price, let alone any price appreciations.
    May 23 04:06 PM | 2 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Back then Yelp didn't have today's ridiculous valuation. No one will buy Yelp at today's valuation. Buying Yelp at $500 million and $5 billion are completely different things to anyone who understands valuation.

    Sure, they will be mini-Google as soon as Motorola becomes a mini-Apple. After all, one can dream, can't he?
    May 23 03:49 PM | 1 Like Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    I agree that looking at Yelp's trailing P/E is meaningless since it's a "growth" company but how about forward P/E? In this article I'm looking at their forward P/E in 2020 and the company still looks ridiculously overvalued. Do we need to look at the company's forward P/E in 2030 before we find any value in it? How far do we have to look? Growth companies get premiums on the assumption that they will someday grow large enough to justify their high pricing. When will Yelp justify it's premium, in 2030?
    May 23 03:39 PM | 1 Like Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Speaking of Google, why won't they buy Yelp if it has so much potential? How about Facebook who was able to buy What's app for $19 billion? Why won't anyone else see all the "value" in Yelp that only you see? Yelp will have to grow at about 100% annual rate for the next decade just to justify's today's price, let alone any price appreciations. Just because there is a $16 billion market doesn't mean Yelp will have much of it. Tesla is in a $2 trillion untapped market, does that mean it should get a market cap of $300 billion just for being in an untapped market?
    May 23 03:34 PM | Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Jonathan Verenger,
    Since you love buying companies with ridiculous valuations like forward P/E of 200, why don't you send me $200,000. I promise to send you $1,000 per year for the rest of your life. In other words, I'll give you the same value Yelp provides you. I also have a oceanfront house in Arizona to sell you. Can I also interest you in some Pets.com shares? I heard that they have less than 1% of the market share and pet products industry enjoys a huge market. Can you see the potential here? I am sure a "great investor" like you wouldn't pass on such an opportunity.

    Actually I have an idea. Why don't you go tell Yelp's management all the potential their company has. Maybe if you convince them, they might stop dumping their shares in the market. Good luck! You gotta love when a pumper desperately attempts to pump a company even management doesn't believe in (evidenced by all the share dumpings).
    May 23 03:12 PM | 3 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Exactly. Even the management of the company thinks Yelp is "sell" but there are still "analysts" who think it's a "buy."
    May 23 11:31 AM | 1 Like Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Wow they have growth opportunities? That's unheard of! Let's give them a target price of $400. After all, they are the only company in the world that grows and let's throw all the fundamentals and common sense out the window. After all, that's what worked greatly in 1999, didn't it?
    May 23 11:30 AM | 2 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Thank you for your "informative and valuable" addition to the discussion and your "well-constructed" counter arguments. We all learned so much from your "comment."

    Just gotta love those who just read the title and come to launch empty and relentless attacks without actually reading or bothering to understand what the article talks about.
    May 23 07:48 AM | 5 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Even growth stocks have fundamentals in them. The difference is that non-growth stocks trade at today's fundamentals while growth stocks trade at future's fundamentals, sometimes as far away as 5-7 years. This article looks at Yelp's projected 2020's fundamentals and even with the most bullish assumptions, the stock still fails miserably.
    May 23 07:40 AM | 3 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Because most of those stocks at least have hopes of getting somewhere someday, such as Amazon and Tesla. Yelp pretty much has no hope and it almost looks like a pump-dump scam. Every time the stock falls, a bunch of "analysts" rush in to pump the stock, the price goes up, insiders dump their shares and investors are caught holding the bag. This is almost criminal.
    May 23 07:39 AM | 7 Likes Like |Link to Comment
  • Will Yelp Ever Justify Its Ridiculous Valuation? [View article]
    Just the fact that you responded to my analysis without reading it is a flaw by itself. My analysis shows that even if we look at 2020's valuation, the stock still looks ridiculously expensive. Just because a company is "growth company" doesn't mean it should get infinite valuation. Even growth companies are priced for valuation they will be getting in 5-10 years and Yelp fails at that too.
    May 23 07:37 AM | 8 Likes Like |Link to Comment
  • 3 Terrific Reasons Why You Should Consider Yelp [View article]
    Yelp is a pump and dump play and nothing more. There is no value in Yelp. Even if it meets all the analyst goals and some more, it will still have a forward P/E near 200. It turns out that spending $50 million in sales and marketing to generate $45 million in revenues is not a sustainable business model. Who would have thought?
    May 22 02:17 PM | 3 Likes Like |Link to Comment
  • Should SodaStream Have The Same Valuation As Coca-Cola? [View article]
    Yes but that could be said for any growth company. Tesla is highly unpredictable, so is Amazon, yet they get huge premiums over their peers simply because they are long-term growth stories.
    May 20 02:15 PM | Likes Like |Link to Comment
  • Should SodaStream Have The Same Valuation As Coca-Cola? [View article]
    Eventually all growth slows down. Speaking of growth, what's Coca-Cola's growth rate? Excluding inflation, Coca-Cola's growth is next to zero in the long term.
    May 20 01:23 PM | Likes Like |Link to Comment
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