Yelp (NYSE:YELP) stock is trending on social media and climbing 11% after one of its largest investors pushed the firm to consider selling itself. The investor, TCS Capital Management, says it believes that Yelp can be sold for “at least $70 a share.”
TCS and its president Eric Semler, have obtained a cumulative 4% stake in Yelp.
More About TCS’ Statement
In a letter to Yelp’s board, Semler wrote that he thinks the latter company “could be sold to either a strategic or private equity buyer for at least $70 per share.” Calling Yelp “shockingly undervalued,” Semler added that another alternative for Yelp is to merge with Angi (NASDAQ:ANGI). Semler previously sat on the board of the latter company, which was formerly known as Angie’s List, and he noted that he has owned ANGI stock for some time.
According to TCS’ president: “A Yelp and ANGI combination would yield enormous revenue synergies and cost savings that could ultimately double the value of Yelp’s shares.”
Semler Blasted Yelp
Noting that YELP stock has sunk 30% in the last five years and has underperformed the S&P 500 by 208% in the previous decade, Semler wrote that the valuation of YELP stock is “depressed.”
He contended that the low valuation of YELP stock stems from poor performances by the company’s CEO and board, along with what he called Yelp’s “outrageously high stock-based compensation” and “poor execution.” Semler added that Yelp’s founder and CEO, Jeremy Stoppelman, has received “unconscionable compensation packages.”
According to Semler, Stoppelman will “fiercely resist” a merger or acquisition deal because of his, current, ample compensation.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.