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Yelp Inc. (YELP) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Yelp Inc. (YELP)

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Intrinsic Value (DCF)

Current$29.16
→
Intrinsic$126.82
+335%
$87.13$126.82$202.12
Market implies 1% growth for 5 years
DCF analysis suggests YELP could have 335% upside at 25% growth — verify assumptions match your view.
At $29, the market prices in only 1% growth — below historical 25%, suggesting low expectations.
Range: Bear $87 → Bull $202. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$155$168$181$195
10%$109$118$127$136
12%$84$90$97$104
14%$68$73$78$84

Bull Case

  • Bull case ($202) offers 593% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($87) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$310.58M
Year 2$388.23M
Year 3$485.29M
Year 4$606.61M
Year 5$758.26M
Terminal$11.16B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$248.47MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is YELP stock undervalued or overvalued?
🟢 UNDERVALUED

YELP trades at $29.16 vs. our DCF-derived intrinsic value of $105.48, implying +245% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of YELP's future cash flows. The bear case ($70.03) still suggests upside, providing margin of safety.

What is YELP's intrinsic value?

Using a 5-year DCF model: Base FCF of $248M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-174M net debt and dividing by 0.07B shares: Bear $70.03 | Base $105.48 | Bull $157.68. Current price $29.16 implies +245% to base case.

How is YELP's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($7.27B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.