Yelp Inc, Groupon Inc and GrubHub Inc: 3 Potential Buyout Stocks
Marshall Hargrave: The Internet was all the rage in the early 2000s. Now, there’s the “mobile first” movement. The idea of building a mobile app before a website or desktop platform has led to a boom in mobile apps.
These apps are attracting the attention of some of the market’s biggest companies.
Twitter paid right at $1 billion for Vine. Google also got in on the frenzy, paying $1 billion for the navigation app Waze.
The latest acquisition in the online world is OpenTable (NASDAQ: OPEN). The travel booking site,Priceline (NASDAQ: PCLN), is making an interesting foray into the restaurant reservation business with its $2.6 billion acquisition of OpenTable. With the buyout offer, shares of OpenTable soared 50% on the buyout news.
There are some synergies to being able to book a flight, hotel, car rental, and now restaurant reservation, all from one place.
But more importantly, the Priceline-OpenTable deal has brought a number of other companies into focus. The acquisition puts all eyes are on these three 3 stocks as the mobile app market booms:
1. Yelp (NYSE: YELP)
Yelp is the popular restaurant review app. TripAdvisor (NASDAQ: TRIP), which is more of a travel review company than a travel booking one, could find value in Yelp.
TripAdvisor already knows all about restaurant reviews and advertising. About 86% of TripAdvisor’s revenues are generated via advertising. Meaning Yelp could be a natural addition to its business, with Yelp generating 94% of its total revenues from ads.
TripAdvisor recently bought up La Fourchette, which gives it a presence in the online reservation market. The thing about Yelp is that it’s one of the most expensive mobile app companies around. The stock trade at a P/S ratio of 20 and a P/E ratio of 227 based on next year’s earnings estimates.