Yelp! Shares slip 14% on second day of trading

Wall Street gave Yelp a less-than-perfect review on its second day of trading. The company’s stock slipped more than 14 percent Monday with shares closing at $20.99.

Yelp made a stellar, five-star debut on the New York Stock Exchange Friday. The business and local reviews site, which has around 66 million monthly unique visitors, saw shares skyrocket 63 percent from $15 to $24.52 on opening day. Today’s dip, however, suggests that the pomp-and-circumstance could be fading quickly.

“Yelp’s price action so far certainly reminds me of Groupon’s post IPO price action,” financial expert and PrivCo CEO Sam Hamadeh told VentureBeat. “We think Yelp’s stock price will continue to fall as (with Groupon) IPO investors who aren’t locked up sell and ‘hit bids’ from small retail investors, punishing the stock price.”

Yelp grew revenue 74 percent to $83.3 million in 2011, but lost $16.7 million during the same period. The company’s continued losses and minuscule revenue figures make it an especially risky bet, though investors were eager to at least temporarily jump on the bandwagon for Friday’s public debut.

“I wouldn’t want to have been the person who bought Groupon stock on the first day of trading at $31 [Groupon is now trading at $18]. And I certainly wouldn’t want to be the one who bought Yelp at $26 on Friday,” Hamadeh said, adding that both companies rely too heavily on sales employees for growth. “Both have ended and will end badly.”

Yelp’s stock has been up and down in after-hours trading Monday, recovering by as much as 8 percent. At $20.99 a share, Yelp has a market cap of $1.26 billion.

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