SunTrust published Monday morning that Yelp YELP gained $750 million on OpenTable OPEN acquisition sympathy, with a little bit from SeatMe and a lot from Yelp as an acquisition target.
SunTrust analyst Robert S. Peck noted how Yelp was up on Friday on the acquisition of OpenTable by Priceline PCLN for ~$2.6 billion. Peck believes the transaction highlights the upside of Yelp's SeatMe asset and the value of local content/service-based marketplaces like Yelp. Peck also commented that potential acquirers of Yelp could include Amazon.com, eBay, Google and Yahoo.
Peck emphasized SeatMe and said, "We recently wrote about the potential for Yelp's SeatMe business as the company seems to have flipped the switch and is now actively marketing SeatMe into the Yelp base of restaurants. The latter point was brought to our attention by the Yelp advertiser panel at our conference last month, but a quick look at the SeatMe website clearly shows that the company is now targeting OpenTable (www.seatme.com)."
Peck continued, "Given Yelp's comparable restaurant-related ratings/reviews (content) and consumer traffic, coupled with SeatMe's materially lower price point, we fully expect SeatMe to encroach on OpenTable's dominant franchise in North America. As it relates to pricing, OpenTable currently garners $697 per month per installed restaurant on average, comprised of recurring subscription payments as well as fees per seated diner. SeatMe charges $99 per month with no seated diner fees. In the near-term, we view OpenTable's Connect customers (11% of installed restaurants) and Rezbook customers (8% of installed restaurants) as most at risk."
The bottom-line, Peck said, was the belief SeatMe has the potential to disrupt OpenTable's lucrative pricing structure.
Yelp has an assigned Buy rating and $74.92 price target from SunTrust.
Yelp shares were last trading up 13.79 percent to close at $74.92 on Friday.
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