Here’s Why Yelp Wants to be Facebook’s New Friend
Yelp (NYSE:YELP) and Facebook (NASDAQ:FB) could just be the next big partnership, should Mark Zuckerberg be as open to the idea as San Francisco-based Yelp is. The consumer review aggregator’s chief financial officer, Rob Krolik told Reuters, “We are actually happy to partner with Facebook (for graph search) if that’s something they’re interested in.”
The social network announced its graph search feature in January, explaining that the tool, now only available in a beta version, would allow users to “trawl their network of friends to find everything from restaurants to movie recommendations.” Should the new feature be successful, it would provide significant competition for Yelp, as well as Google (NASDAQ:GOOG) who uses a Google Plus Local product to recommend businesses to users based on their past reviews and locations.
Analysts view Facebook’s new move as a problem for Yelp, but Krolik contends, “I just don’t think people go to Facebook to find a great local business. I think they connect with their friends, see a lot of photos.”
The success of Facebook’s graph search depends largely on their ability to launch a mobile app. Yelp already has a depth of review content and its mobile app allows users to discover local businesses and post reviews as well as other relevant knowledge. Though Yelp has acknowledged its willingness to partner with Facebook, analysts don’t consider the partnership to be likely. While it would undoubtedly benefit Yelp, helping cut down its competition, Facebook already believes it has enough data to launch the new feature on its own. The company has declined to comment on any possibility of the partnership.
However, should the partnership come to fruition, it would not be the first time the two companies linked up. Yelp already has a “tie-up” with Facebook Connect, allowing users to login with their Facebook information instead of having them create separate accounts for different websites.
The search site, founded in 2004, has yet to post a profit; however, analysts expect 2014 to be Yelp’s year. According to Reuters, the company is expected to post its first profit of one cent per share for the first quarter of 2014. Its shares have risen 80 percent in the last year, but fell 6 percent on January 15, the day Facebook revealed its graph search.
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