Investment Idea: $100 invested in Yelp
Total Investment: $100
Total Time Cost: 00:10:00
Extra Costs: $9.08
Total Time Spent on Investment: 10 minutes to set the trade trigger on TD Ameritrade.
Research and Preparation:
In order to get set for this investment I logged into my TD Ameritrade account and searched for stock ticker YELP. It came up and was trading at a price of $24. That seemed to be way too high, and buying four shares for a total of $100 at $25 a share didn’t seem ideal. Instead, I set a stock trigger to buy five shares of Yelp if the price hit $20 a share.
(Yelp share buy trigger is set)
Low and behold, only a couple of days after setting the trigger a load of bears showed up and shorted the stock.
(Yelp share price chart)
As you can see the price is now hovering below the $20 amount I paid for it. Yelp also has an earning call on August 1st, so hopefully they will have some good news and the tide will turn back in my favor.
Reason for Investment:
Excluding the recent bearish trend on this stock, I personally believe Yelp is a great service and is still well positioned in the reviews/restaurant local search market place. This market, which I consider to include such sites as MenuPages and OpenTable, is ripe for acquisition and mergers. After the Instagram deal, a billion dollar acquisition no longer seems like that much of an impossibility. Last year Google purchased Zagat, and ironically, the person who led that acquisition was none other than Marissa Mayer,* who has since left Google and now heads up Yahoo. As the battle for ad dollars continues to grow I feel another attempt at acquiring Yelp is on the way, either from Google, Facebook, or Microsoft. However I wouldn’t rule out a surprise buy out by Apple, who is flush with cash, and looking for ways to better compete with Google, and help soup up it’s Siri voice search app.
At the time of writing this, Yelp’s market capitalization was hovering at around $1.2 billion dollars, allowing for one of the aforementioned big four to come in and scoop it for most likely a $2 billion dollar price tag.
When setting the buy trigger on this investment I intentionally set the price at a low amount of $20. I believe that Yelp has a very real chance of being acquired in the next year or so, and at a price range of $35+ a share. To find the current value of this investment, take the current price of a share of Yelp and multiply it by five. To find an up to the minute price click here!