• by Gavin O'Malley , Staff Writer @mp_gavin, November 18, 2011

On the heels of Groupon’s successful IPO, local business review site Yelp just followed suit with a $100 million public offering of its own. “Reports have been that Yelp will seek a valuation of between $1 billion and $2 billion, although [the] filing does not reflect any specific valuation hopes,” reports Fortune.

What are the odds on Yelp’s long-term success?

As The Wall Street Journal notes, “Yelp has been a big critic of Google, which Yelp contends tweaks its search results to advantage Google products that compete with Yelp.” The problem? “Yelp said in its IPO document that it gets more than half its Web traffic from Google. And Yelp warns if Google tweaks its search mechanics --  which Google has been doing  -- then Yelp could take a hit.”

“Yelp faces both a volatile market and stiff competition from Google and other giant players,” writes Mashable, noting: “Internet IPOs are still hot though, as Groupon, LinkedIn and Angie’s List have proven in recent months.”

“Financially, one of Yelp's greatest vulnerabilities may be its ballooning advertising and marketing budget, which jumped 55 percent to $38.5 million in the nine months ended September 30 compared to a year earlier,” reports CNet. “The good news is that Yelp's promotional spending is no longer growing as fast or faster than revenue; such spending nearly doubled in 2009 and 2010.”

“Yelp, which makes the bulk of its revenue from advertising contracts with local businesses, is not yet profitable,” notes The New York Times. “Though revenue rose 79.9%, to $58.4 million for the first nine months of this year, the company recorded a loss of $7.4 million.”

Another cause for concern, six of Yelp’s top executives and investors cashed out $36.8 million worth of Yelp stock during the company’s most recent funding round, reportsGigaOm, citing the company’s IPO filing.

“It is not unusual for executives and founders to cash out some stock holdings before the company’s main liquidity event,” GigOm admits. “Even so, the size of [CEO Jeremy] Stoppelman’s and [board chairman Max] Levchin’s pre-IPO stock sales could raise a few eyebrows.”