Yelp Inc. (YELP): A Bull Case Theory

Core Thesis - Yelp Inc. is viewed as a compelling investment opportunity due to its deeply discounted trading multiples and the full pricing in of near-term concerns [2][6] Financial Metrics - As of December 1st, Yelp's share price was $28.62, with a trailing P/E of 12.91 and trading at 4x EBITDA, 13x trailing earnings, and 1.4x sales [1][2] - The company has rising EBITDA margins and declining EV/EBITDA ratios, indicating undervaluation compared to peers [4] User Engagement and Brand Strength - Yelp's user base remains engaged, particularly among younger demographics, and the platform enjoys strong brand recognition and trust [3] - The integration into Apple's ecosystem presents strategic optionality, including the potential for acquisition by Apple, which could enhance the platform's reach [3] Shareholder Value and Financial Strategy - Share repurchases have significantly reduced the outstanding share count, although this has not yet been reflected in stock performance [5] - Yelp ranks in the top decile of the Magic Formula, showcasing strong ROIC and EV/EBITDA metrics relative to the broader market [5] Strategic Opportunities - The fragmented ownership and founder-led structure create an environment conducive to activist intervention or strategic transactions [6] - A potential sale to Apple at a premium could unlock substantial value, positioning Yelp's data set as a core asset for AI-driven monetization [6] Overall Investment Profile - Yelp is characterized by a rare combination of undervalued tangible and intangible assets, resilient revenue streams, and strategic optionality, offering a highly asymmetric risk/reward profile for investors [6]