In a recent mail sent to investors, Axiom Capital Management’s Managing Director (Internet Media segment) Victor Anthony looked into one reason he believes shows why Facebook Inc FB (Buy rated) is likely not interested in Yelp Inc YELP (Hold rated, $43 price target).
The analysts at Axiom Capital have argued previously that they are “hard-pressed to see why Google Inc GOOGL GOOG and Facebook would buy Yelp, since they “both are organically replicating the review aspect and other features of Yelp’s business model.”
According to an article published on Grub Street, Facebook is trying out a new feature that will display critic reviews (along with users’ comments) for select dining locations across America. The professional reviews will come from publications like New York, Bon Appetit, Conde Nast Traveler, Eater, and the San Francisco Chronicle.
Below is an example of the pro critics...
And user reviews...
So, if Facebook is launching a service that directly competes with the one offered by Yelp, why would it be interested in acquiring the latter? – Anthony asks, adding that the company “could very well find a buyer,” but not Facebook or Google.
On top of the aforementioned competitive threats, Yelp faces “a series of structural issues including: 1) declining salesforce productivity; 2) pressures on brand advertising due to the industry shift to programmatic advertising; 3) traffic growth is decelerating due to the desktop transition; 4) decelerating mobile traffic growth; and 5) advertiser attrition.”
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