Shares of Yelp (NYSE: YELP), the local search and review website, soared 64% following the company's IPO debut on Friday. Over 17 million shares changed hands on YELP's first day of trading, more than twice the number issued by the company.
But the enthusiasm over the Yelp IPO is tempered by concerns about the company's long-term prospects. According to the Los Angeles Times, YELP faces competition from sites such as Facebook, which are moving into the growing local advertising space. YELP also has yet to turn a profit: the company lost $16.9 million in 2011, up from $9.6 million in 2010.
Investors seeking to profit from the local advertising boom should consider Local Corp. (NASDAQ: LOCM). Operating since 1999, LOCM is on a rapid growth trajectory that should further strengthen its position in the local advertising space.
Over the past year, LOCM has diversified its product offerings to include local display ads, daily deals and local product search results. The Company also entered into a lucrative partnership with Google. These growth initiatives enabled the Company to deliver a record quarter for the period ended December 31, 2011 and have put it on track to achieve 40% revenue growth and positive adjusted net income in 2012.
Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.