Tomahawk, WI 8/07/2013 (Basicsmedia) – Yelp Inc (NYSE:YELP) had a very poor reputation in 2012 when most people started viewing it as a bad investment. There is concern as to whether this position has now changed or not, since this player in the Internet Information Providers industry is loved and its products used by many people all over the world. The company was founded in 2004 and has been serving a wide range of customers located in Belgium, Finland, Switzerland, France, Canada, UK, the U.S, and Germany to mention but a few. However, has it become a good investment in 2013, or not?

Why Was YELP Considered Bad Investment last Year?

YELP failed to convince investors about its worth purely because many people distrusted its business model. Secondly, this company wasn’t considered as the best in the industry where it operates, and in some circles, the overriding view was that it was damaged company with equally damaged stock. It is also expected that by August 2013, many shares of YELP will be released into the market and going by the trend in similar scenarios affecting other companies in this industry, such as Zynga and Groupon, no one really expects the stock to avoid any decline like it happened with its competitors.

YELP went public last year through its IPO. And just like Facebook, there was general consensus that it performed poorly in this sector. Anyone who invested in YELP last year must have wondered why the IPO became such a disappointment even after it had been expected to be one of the few bright spots for 2012. There is a lot of uncertainty within the social media market, and this is perhaps one reason why companies within this segment are not reporting wonderful results even after going public. Its products are still popular with most customers, but the results are not being transferred to the stock and shares.

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This image, which is courtesy of www.beta.fool.com, shows

YELP’s expenses vs revenues for 2011-2012.

YELP Must Develop Effective Mobile Monetization Strategy

The perception by many people regarding YELP’s value as an investment vehicle, has not been helped any further in 2013. YELP is still considered a failure due to its inability to develop a mobile monetization strategy which is productive and as effective as the one Facebook came up with. Close to 45% of all traffic to YELP site, is reportedly from its mobile app. Some of the competitors YELP has to contend with in this area include CityGrid Media LLC, Craigslist Inc, and Yahoo! Inc, and it has to do a lot of work in order to convince its investors that it is a good option for them.

Perhaps, YELP will need to take a deeper look at is model and come up with innovative ways of handling the challenges it is facing at this moment. A closer look at this company, will reveal that it has to deal with the fact that it relies quite heavily on Google, where most people search for it. Interestingly, Google also provides services which are quite similar to those of YELP. Google’s decision to acquire both Zagat and Frommer has eaten into some of the work YELP used to perform. Therefore, I would say that YELP still faces a future which is filled with a lot of uncertainty, as a company and investment tool.

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