Angie Hicks is the founder of Angie's List. (MCT )
Consumer review site Angie's List Inc. had a strong first day on Wall Street, but it will soon have more company as rival Yelp Inc. on Thursday filed for an initial public offering of its own.
Angie's List shares closed at $16.26, up 25% from their IPO price of $13. The initial public offering raised $114 million in all.
Yelp, meanwhile, didn't indicate how much it would raise but said it could be as much as $100 million. It did not say how many shares it plans to sell or list an IPO price per share.
Like many of the growing batch of online firms going public, neither company is profitable. Indianapolis-based Angie's List, founded in 1995, has amassed more than 1 million paying members who review businesses such as plumbers, home remodelers, doctors and auto repair shops.
San Francisco-based Yelp has become a go-to site for reviews on restaurants, bars, nail salons and other businesses. It's a free site that gets revenue from advertising.
According to an earlier company filing, Angie's List planned to sell 6.25 million shares and existing stockholders would sell 2.5 million shares. The stock trades under the ticker symbol "ANGI."
Through the first nine months of this year, Angie's List had revenue of $62.6 million and a loss of $43.2 million. It said it had incurred net losses since inception and had an accumulated deficit of $160.6 million as of Sept. 30.
David Menlow, president of research firm IPOfinancial.com, said despite the company's strong first day of trading, its inability to turn a profit in 16 years was a concern.
"Everyone's comparing it to where Amazon stood when it became public: 'Let's nurse it along, it'll do what it has to do and it'll be a successful company in the public markets,'" Menlow said.
"But that's not always going to be the case, and Angie's List just doesn't seem to give us the sense that things are going to materially change for the company that will turn it profitable."
A spokeswoman for Angie's List declined to comment, saying the company was in a quiet period.
The company was co-founded by Angie Hicks, now chief marketing officer, after a friend told her about his difficulty finding a good contractor for his home. To get the company off the ground, Hicks, who started Angie's List right out of college, answered phones and went door to door in Columbus, Ohio, to market the business and sign up members. In 1999, Angie's List added a website to its call-in business.
Angie's List expands into new cities every year and is currently in 175 U.S. markets. Reviews aren't posted anonymously, and companies can't pay to be on the site.
A typical Angie's List member is between 35 and 64, is married, owns a home, is college educated and has an annual household income of at least $100,000. Last year, members averaged 11.4 unique searches, and 37% wrote a review on at least one service provider.
Yelp, one of Angie's List's main competitors, targets a younger, more urban customer base looking for places to eat, shop and play. "Yelpers" have written more than 22 million local reviews. The 7-year-old company, which had about 61 million monthly unique visitors in the third quarter, has been eyeing an IPO for months.
In its prospectus, Yelp reported revenue of $58.4 million for the first nine months of the year, an 80% increase over the same period in 2010, and a loss of $7.6 million.
A Yelp spokeswoman did not return a call for comment.
Several highflying tech companies have gone the Wall Street route this year.
Two weeks ago, shares of daily-deals website Groupon Inc. rocketed 31% after being listed on the Nasdaq Stock Market. The IPO raised $700 million for the 3-year-old company. It was the largest initial public offering by a U.S. Internet company since Google Inc.'s debut in 2004. Professional networking site LinkedIn Corp. went public in May and music site Pandora Media Inc. in June.
The companies' strong showings are helping ease fears about the hobbled IPO market, which fell apart amid the global market volatility. They also bode well for other well-known technology names waiting to go public, including social media behemoth Facebook Inc. and online gaming giant Zynga Inc.
Josef Schuster, founder of IPO research firm IPOX Schuster, said there was strong demand among investors for Internet companies and noted that many were still relatively young.
"Many of these companies have not had enough time in the market to prove the fundamentals," he said. "But right now, the market gives them the benefit of the doubt, and you see that in the pricing behavior."