This Yelp Bear Is Worried About Competition

• Yelp Inc (NYSE: YELP) shares have declined more than 59 percent year-to-date.
• Northland Capital’s Darren Aftahi has maintained an Underperform rating on the company, while lowering the price target from $21.50 to $17.75.
• Aftahi believes that new features added to local search by competitors would intensify the competition for Yelp.

According to the Northland Capital report, Facebook Inc (NASDAQ: FB), Google Inc (NASDAQ: GOOGL) and Amazon.com, Inc. (NASDAQ: AMZN) “have recently added feature sets that we believe are aimed squarely at local search, particularly around small business discovery and commerce.”

The new features focus on improving local search and discovery and include tools to enable easier communication between businesses and consumers. Aftahi believes this makes Facebook and Google very similar to Yelp.

Earlier, Apple Inc. (NASDAQ: AAPL) had added the “swipe right” feature, which had the potential to help increase Yelp’s brand awareness and lead to a near term increase in Yelp app downloads.

However, Aftahi believes that in the long term, this feature “may translate into lower engagement on the Yelp app.”

“With a growing list of alternative means to find local businesses easily, we remain cautious on Yelp’s growth prospects,” Aftahi added.

Image credit: Nan Palmero, Flickr