Yelp shares rise 64% in stock market debut

Yelp's stock opened to five-star reviews from investors on Friday, soaring 64 percent even though the company has yet to prove it can make money from its online recommendations.

After Yelp's initial public offering priced at $15, the shares gained $9.58 to close at $24.58 in their trading debut. The 8-year-old reviews site's IPO sold above its targeted range of $12 to $14 per share.

Yelp Inc.'s IPO is the latest in a series of Internet stock offerings that are serving as a prelude to Facebook's coming-out party on Wall Street this spring. Facebook's IPO is expected to raise at least $5 billion and give the Internet's largest social network company a market value of $75 billion to $100 billion.

After expenses, Yelp estimates it will get about $96 million from its IPO. The company sold 7.1 million shares. Investment bankers have an option to sell an additional 1.07 million shares, depending on investor demand. With Friday's stock price jump, the San Francisco company has a market value of $1.47 billion.

The biggest winners are Yelp's chairman, Max Levchin, and its chief executive and co-founder, Jeremy Stoppelman. Levchin, 36, owns 7.1 million shares now worth about $175 million, and Stoppelman, 34, owns 5.9 million shares now worth about $145 million.

The IPO also will enrich many of Yelp's 900 employees who received stock incentives as part of their compensation packages.

Though Yelp is best known for restaurant reviews, its users have reviewed churches, strip clubs, hospitals, hotels and high schools.

The company makes money from advertising. Most of the ads come from the local businesses that its users review. In 2011, it booked revenue of $83.3 million, up 74 percent from 2010. It had a net income loss of $16.7 million last year and $9.6 million the year before. Yelp's losses since its inception total $41 million.