Yelp, the popular review platform, is facing a challenging landscape according to a recent analysis by BofA Securities. Analyst Nitin Bansal initiated coverage of Yelp with an Underperform rating, citing concerns about declining user base and intense competition from platforms like Google and social media giants.
Bansal pointed to data suggesting that Yelp’s mobile monthly active users (MAUs) have contracted by a significant 70% since 2018 and are down 5% year-to-date. He further highlighted a growing trend of consumers turning to alternative review platforms like Instagram and TikTok, according to a survey by BrightLocal.
Adding to the pressure, Bansal noted that Yelp faces stiff competition from Google, which creates challenges in gaining a larger share of the review market. The analyst also expressed concerns about the company’s Restaurant, Retail & Other segment, which accounts for nearly a third of its total revenue, where increasing competition is expected to continue impacting growth prospects.
These concerns led Bansal to anticipate downward revisions to Yelp’s future earnings estimates, potentially putting pressure on its valuation.
Yelp’s shares took a hit following the analyst’s report, dropping by 3.1% to $33.35 at the time of publication on Monday. This situation highlights the growing challenges Yelp faces in an increasingly competitive online review landscape.
