Groupon and Yelp are hot again -- for now
Both are posting some hearty numbers, thanks to their mobile and local qualities.
Can the rally in Groupon (GRPN) be for real? How about Yelp (YELP)? These two companies have long been at the heart of efforts to figure out what to buy and where to eat and where to stay. With this quarter just reported, these stocks have enjoyed a remarkable resurgence and surge, respectively, because of mobile -- and, more important, because of a pickup in local commerce.
Yes, Groupon and Yelp have managed to harness two of the most important trends in business right now: the rise of the mobile app vs. the desktop, and the return of growth to consumers.
Now, I don't want to get carried away here. Groupon also has a sizable international business that is in decline, and there are real issues about whether the company is really making money at all. In this seasonably weak quarter, Groupon was cash negative. Yelp has become, overnight, one of the most overpriced stocks in the book.
There are no real earnings, so there are no price-to-earnings ratios. But the core business metrics, like more couponing for Groupon, and more reviews for Yelp, are definitely headed in the right direction.
For Groupon that's huge news, because many people have thought the company may not even make it. Remember the lifecycle here. First it was a darling, then it was a dog, then it was a dead dog. The obituary had been premature, but it is still a dog.
Yelp, however, has a definitive pulse. It had accelerating revenue growth, or ARG, and that remains the holy grail of which we see so little. When we do see it, we tend to overpay for it because of its scarcity value.
Most of the Internet companies I follow -- indeed, most of the tech companies I follow -- have been hurt, and in some cases almost annihilated, by the migration from the desktop to the handheld.
Uniquely, though, these two companies benefit because they are leveraged to local commerce. In fact, I can't even begin to count how many times Groupon's new management used the term "local" in its preamble to the earnings call. Mobile usage now accounts to 45% of the business, up from 30% a year ago, and that conversion is what explains the 45% increase in North American business. The company made sure that everyone who listened to the call heard "local business experienced some solid sequential growth" -- because, and I quote, "We are a local company."
Yelp came armed with some real serious statistics about how local businesses have reaped outsized gains by signing on with Yelp. The average lift was $8,000 via a free business-owner account, with a $23,000 average gain if the business advertised with certain categories like auto, home and local service. The local usefulness explains how 36% of the users have found businesses via the Yelp mobile app, up from 25% a year ago. That's how you get local revenue up 81%, which in return gave Yelp a 58% year-over-year lift in revenue.
These are remarkable numbers from Yelp. They are a testament to how this company, even more than Groupon, is uniquely suited to the mobile model.
More important, though, I believe neither company could be doing as well as these numbers now indicate they're doing if the American consumer weren't going out more and shopping more. That gives these two companies both secular and consumer growth, which are the real reasons behind their surge.
Given that one-third of Groupon's market capitalization is cash, and the rate of decline has slowed, I can see why people might be willing to pay high single digits for the stock. I remain somewhat skeptical because, in the end, it still isn't making money. New management has clearly helped the cause, though.
Yelp, on the other hand, could break out to remarkable profitability rather quickly. But its nearly $2 billion market cap gives little room for growth, so it too might not have all that much upside.
Still, for the moment, they are hot once again because of their mobile and local qualities. That said, given the lifecycle of non-Google (GOOG), non-Yahoo (YHOO) Internet companies, nothing's assured and nothing can ever be taken for granted.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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I wonder what his "work mates" (aka his webcam) make of him typing away furiously, all day long , fat sausage like fingers pounding the keyboard, neck fat rolls squelching out from over his shirt collar ---full of hate since his boys mittcula and eddie munster lost the last election after abs told EVERYONE that they were going to win ....so full of confidence then and so full of **** now .....
I just can't comment on stuff like this, because I have no interest in it...
Besides today is my day off, golf and such. Unfortunately I am too sore to play..
Old age is a bitch....And then you die....Stay healthy.
Barry S.You come to Akron on the 23rd and I`ll box like a young ALI.Rember what happened to
"big cat" Williams when Ali wipped him?The same thing would happen to you.
Regal Man I see you invited the phat DB to meet you in Akron but trust me he won't ---- gutless coward I believe he was known as from grade school through now --- I offered to buy him a drink when I am new york but he has not accepted cos i guess he only brings 2 pairs of depends to work each day .....
One thing anyone should keep in mind...When comparing fighters.?
Is Styles,Training and what is allowed by different Rules today.
Much of it is a far cry from back in the day or yesteryear...
But that's about true in all competitive events...Nowadays.
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July 30, 2004, U.S. embassy in Taskkent, Uzbekistan
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Militants stormed and occupied perimeter wall. Five killed, 10 wounded.
March 2, 2006, U.S. consulate in Karachi, Pakistan
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September 12, 2006, U.S. embassy in Damascus, Syria
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January 12, 2007, U.S. embassy in Athens, Greece
A rocket-propelled grenade was fired at the embassy building. No one was injured.
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I go away then come back to check a little on the Markets....
And you guys kicked the healthcare and health problems into high gear...
All I said, was I was too sore to play golf today; .... And to stay healthy..
The guys I usually play with and know best, range from about 60-85, we have heard it all.
Some youngsters as I was, join the league at about 55-58 and many are retired or maybe work a little partime..So they have money for golf and drinking..?
We have lost(died) as many as 4 members in a year, average is about 2...per.
The 2012 season..no one. This year one in his mid-70s died about a month ago..He will be missed
He was a sandbagger.
We have various guys with various ailments...Sometimes we get tired of people bitchin', because it brings us all down..
I'm about average in the pain arena, but have had quadruple by-pass, only about four others have had any by-passes...Some just die from heart attacks.
I have 2-3 bad discs, but don't want surgery; Plus nerves pinched in lower, legs go numb.
Arthiritis in back, arms,(et al), knees.....One knee goes out of joint and pops ocassionally.
One eye is going to hell...
We have guys pretty much blind in one eye..
Cancer patients and survivors.
Many have had surgery on one thing or another..
Some take 6 Aleves in the morning to play..Back probs
Many on different pain meds...
The biggest cry baby(late 70s) carries a quart sized Zip lock baggy, full of pills.
I carry a small pill bottle with Nitro, baby aspirin and benadryl(sp) became allergic to wasps and hornets a few years back...Have epiderm don't carry it...Too big.
Most guys do carry a few pills..
I don't take any pain pills...
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Real estate makes me uncomfortable, even commercial real estate, but I picked up 600 shares of GAIN at $7.24 per share. I love stocks with monthly dividends. If you have them on dividend reinvest, they grow fast. I held some of this years back, but the price went up enough I had to take the money off the table.
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Barry, I have a uncle who was a Archie Bunker like yourself.I sat him down and had
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the last person ABS "knocked out" he was using a roofie .....let's hope the poor young fellow will recover eventually .....
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