A top name in mobile apps just landed at the
top of the hedge fund world. David Einhorn, manager of Greenlight
Capital, has taken a big position in Yelp, the hedge fund manager
disclosed in a note to investors reported by Yahoo Finance.
The investment reflects a bet that Yelp will
emerge unscathed following the release of a new documentary, “Billion
Dollar Bully,” that purports
to have uncovered “allegations against Yelp regarding extortion, review
manipulation and review fabrication” that have led to a series of unsuccessful lawsuits.
“The stock has suffered due to missed
expectations and anxiety about an upcoming negative documentary,”
Einhorn wrote. “We’ve reviewed the criticisms raised in the trailer to
the documentary, and we are comfortable that they won’t have a negative
impact on our investment thesis.”
In Einhorn’s eyes, Yelp’s decline over the past year — which some have attributed
partly to news of the film’s production — is divorced from the popular
app’s fundamentals. “Yelp is a dominant search-and-review website for
local businesses, with roughly 200 million unique monthly visitors and
the 21st-most popular mobile app in the U.S.,” Einhorn wrote.
With initiatives to boost earnings from
reservation and delivery services while cutting staffing costs, Einhorn
said, Yelp could double its total revenue by 2019. In the hedge funder’s
estimation, that would value Yelp’s stock at $55 a share. The stock
closed Monday at $21.54.
As Einhorn is coming off a difficult year that saw Greenlight plunge 20 percent, investors
are watching the otherwise successful money manager’s moves closely.
This investment is no exception. Following news of Einhorn’s position,
shares of Yelp jumped 4.3 percent after-market to $22.46.
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