Uber's Expanded Food Delivery May Hurt Yelp, Analysts Say

By Markets MarketWatch Pulse

Yelp Inc. may face pressure from the expansion of food delivery services from Uber Technologies Inc., according to B. Riley analysts. A Wall Street Journal article reported that UberEats, a service where Uber couriers deliver food from restaurants, would grow to include 10 large U.S. cities and more delivery hours. There are other venture-backed competitors, but the analysts say Uber could curtail the growth of Eat24, Yelp's food delivery service. "Our concern is from deep pocketed, win-at-any-cost competitors such as Uber and [Amazon] ," the analysts wrote. That pressure may drive Yelp to to increase advertising for Eat24, along with advertising for its own core business, which will hurt its operating leverage, the analysts wrote. The analysts have a sell rating and $21 price target for Yelp. Shares of Yelp have fallen 6% in the past three months, compared to the S&P 500's drop of 8%.

Continue Reading Below

Copyright © 2016 MarketWatch, Inc.