Go Public Now, Yelp

We've known for a while to expect hockey-stick-like growth in mobile data. What's been missing is research that accounts for how the rise in mobile data will affect mobile advertising. BIA/Kelsey just filled that gap. In a press release issued yesterday, the researcher predicts that total U.S. spending on mobile ads will rise from $790 million last year to more than $4 billion by 2015.

Some will read that and get excited about Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) , since the two companies own leading mobile ad networks. (iAd and AdMob, specifically.) You know what I thought when I read that? Yelp should go public right now.

Not only is the IPO market pining for good stock stories, but there's also a race under way to achieve scale in serving mobile ads. Yelp -- an on-the-go business directory that once was the subject of Google's affections -- is just a contender. The other two notables include:

  • Foursquare, which has a deal with American Express (NYSE: AXP  ) in which businesses will offer rebates to those who use their cards to purchase after checking in. The company is often mentioned in the same breath as Twitter and Facebook.
  • Loopt, which, like Foursquare, has a deal with Groupon for distributing localized ads to those who check in using its service. Loopt has roughly 4 million registered users.

Fools will rightly point out that only yesterday I preached patience to Foursquare, a Yelp peer. There's time to build the business, I argued. What's changed in the past 24 hours? Nothing. I still believe Foursquare can be patient.

The difference between these two is that while Yelp is larger, serving some 50 million users monthly, it doesn't enjoy the thriving social component that defines Foursquare -- a network that, over time, could become a rich environment for advertisers.

Yelp needs even more scale (more businesses, more users, more check-ins, etc.) to combat Foursquare's threat, and the only way to get scale is to first get capital. An IPO would solve that problem.

Do you agree? Disagree? Please weigh in using the comments box below. You can also add any of these stocks to your watchlist to get our latest analysis as it's published:

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Apple and Google and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1511965, ~/Articles/ArticleHandler.aspx, 10/23/2014 2:12:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement