Yelp Inc (NYSE:YELP) continues to expand its domestic and international geographic reach. Those expansions come with costs, however, including lower margins. The game plan is for the costs to pay off in the future, of course, but how risky would it be for you to make that bet? Are there review sites that offer better investment opportunities, such as Tripadvisor Inc (NASDAQ:TRIP) or Angie’s List Inc (NASDAQ:ANGI)?
We’ll look at all three businesses and how they operate in the simplest terms possible. Then we’ll cover their fundamentals and potential prior to forming an opinion on which company offers the best investment.
What is Yelp?
If you’re planning on dining at a new restaurant, downing a few beers at a nearby bar, shopping at a store, or dancing and mingling at a nightclub, then you might want to check Yelp Inc (NYSE:YELP).com first. It’s a short time investment and it could save you a lot of time and money. You would also be following a popular trend.
According to Alexa.com, Yelp.com currently ranks no. 186 in the world and no. 45 in the United States for Internet traffic. Those are significant numbers, and the global rank improved nine spots over the past three months, but this doesn’t necessarily indicate financial success. Yelp’s revenue has consistently increased on an annual basis, but it has been in the red for four consecutive years.
As Yelp Inc (NYSE:YELP) continues its domestic and global expansion, expenses increase. Fortunately, Yelp has nearly $100 million in cash and no debt. As long as Yelp doesn’t eventually end up in highly-leveraged territory, this expansion looks to be a wise choice. On the other hand, with a low barrier to entry for review sites, a new competitor could set up shop and steal market share with ease. Yelp is a well-known name, but it’s still not a household name. Perhaps the company’s expansion efforts will help in this regard, but it might also need to offer a unique feature that establishes the brand more and keeps potential rivals at bay.
What is TripAdvisor?
If you’re planning a vacation and you would like to research traveler reviews for hotels, vacation rentals, restaurants, and attractions, then you should consider using TripAdvisor.com. The Alexa ranking for Tripadvisor Inc (NASDAQ:TRIP) isn’t as high as Yelp Inc (NYSE:YELP)’s, coming in with a global rank of no. 237 and a domestic rank of no. 89, but that doesn’t mean that the company’s financial results are weaker.
TripAdvisor’s revenue and earnings growth have been slow over the years, but they have also been consistent. Savvy investors like when a company doesn’t grow too fast. Tripadvisor Inc (NASDAQ:TRIP) is always profitable, too. Considering the company’s reach, brand strength, and strong fiscal management, it’s also a possible acquisition target at some point down the road.
TripAdvisor-branded websites are offered in 30 different countries, including daodao.com in China, which currently has a global online traffic rank of 8,983. More importantly, daodao.com’s rank has moved up an impressive 2,041 spots over the past three months. daodao.com ranks No. 1,174 in China.
Tripadvisor Inc (NASDAQ:TRIP)’s presence in China is only one example of its broad diversification. In addition to that, as well as 20 other travel media brands, it owns Tingo.com, a site that allows you to automatically receive partial refunds on your credit card if the hotel room you booked sees a rate drop. Tingo.com has a global online traffic rank of 35,805, and that rank has increased 7,371 spots over the past three months. Tingo.com ranks No. 7,175 in the United States.
As you can see, Tripadvisor Inc (NASDAQ:TRIP) is no stranger to diversification. As long as the travel industry remains relatively healthy, this will greatly increase the odds of future success.