Activist investor TCS Capital wants Yelp to consider strategic options

Shares of Yelp Inc (NYSE: YELP) opened about 10% up this morning after an activist investor disclosed a sizable stake in the recommendation website operator.

TCS wants Yelp to merge with Angi

On Tuesday, TCS Capital Management pushed the California-based company to explore strategic options including a possible sale. The hedge fund owns over 4.0% of Yelp.

Eric Semler (President of TCS) also sees a merger with Angi a viable recourse for the internet services company. In his letter to the management, he wrote:

The said merger, Semler added, could see Yelp shares more than double from here to about $70.

Yelp shares have rallied this month

It is noteworthy, though, that Yelp shares have gained a whopping 35% over the past three weeks.

In his letter, Semler also took an issue with CEO Jeremy Stoppelman who he said was overcompensated despite a long history of poor execution. According to a company spokesperson:

Earlier this month, Yelp Inc reported its financial results for the first quarter that handily topped Street estimates. It now forecasts revenue to fall between $1.3 billion and $1.32 billion this year. Wall Street currently has a “hold” rating on the New York-listed firm.