Yelp Adds New Features to Its Platform: What Should Investors Do?

Zacks
2024-12-11

Yelp Inc. YELP shares have gained 19.7% in the past three months, outperforming the Zacks Computer Technology sector, Zacks Internet Content industry, the S&P 500 and  Technology Select Sector SPDR Fund’s XLK return of 10.5%, 5%, 8.5% and 7.5%, respectively. This shows investors’ confidence in Yelp’s robust product positioning and strong financial performance.

Yelp recently added several features to its platform. These features include AI-powered review insights, personalized home feed, expanded recognition and tipping transparency for customers. Businesses listed on Yelp’s platform can now benefit from AI-enhanced inbox, smart selection for ads and competitor insights.

AI-powered review insights summarize user sentiments and rate them from 1-100 on various business aspects like food quality and service using scores. The recognition feature now covers a wider category. The smart selection of ads feature optimizes ads by testing the top reviews and photos.

Yelp has also added new features to Yelp Assistant, which now supports text and call requests. These features will enable users to explore and discover new ways to connect to businesses increasing the app’s efficacy.

Yelp 3 Months Price Performance Chart


Image Source: Zacks Investment Research

Yelp Boosts Growth With Innovative New Features

Earlier in 2024, Yelp enhanced its platform with Summer Ad Product Updates where it introduced new tools for advertisers, including Spotlight Video Ads, Yelp Audiences Expansion and Conversion API. In its spring product release, the company introduced Yelp Assistant, Yelp Fusion AI API and new enhancements in Yelp Guest Manager. These features have added a new user base driving YELP’s top line.

Yelp's continued investment in artificial intelligence and machine learning has enabled it to increase ad clicks and decrease average CPC. Yelp has also implemented various other user experience and backend improvements, including features designed to cater to users with accessibility needs.

YELP also partnered with industry giants, including Alphabet GOOGL and Apple AAPL, to enhance its products. These initiatives reflect the company’s broader commitment to enhancing the user experience, which is likely to drive higher engagement and loyalty on the platform, ultimately contributing to sustained revenue growth.

Yelp Guest Manager is integrated with Reserve with Google where diners can book a table or join a waitlist through Google Search and Maps. In its recent product enhancements, Yelp rolled out Request a Quote integration on Apple Maps, which will enable users to request quotes from local professionals across multiple categories. These initiatives will likely help Yelp in adding more businesses and further growing advertising and RR&O revenues.

For 2024, the company anticipates revenues between $1.397 billion and $1.402 billion. The Zacks Consensus Estimate for revenues is pegged at $1.40 billion, indicating year-over-year growth of 5.11%.

What Should Investors Do?

YELP has managed to grow its revenues on the back of innovative products, increasing its customer base and growing paying ad locations. The company also sports a Zacks Value Style score of A, indicating that Yelp is fairly valued.

Considering all these factors, investors should buy this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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