Yelp's Mobile Gains Are Eating Away at Google's Ad Revenue: StockTwits

NEW YORK (TheStreet) -- Yelp  (YELP) is causing Google  (GOOG) some pain in mobile. A new report by research firm eMarketer shows Google's share of mobile search ad dollars is dropping as Yelp's share skyrockets.

Yelp stock was trading just shy of $66 as of 11 a.m., down 4.5% year to date but up 126% over the past 52 weeks.

On StockTwits.com, a majority of investors believe Yelp's stock is headed higher, along with its mobile ad revenues. Sentiment on the stock is 53% bullish, according to site analytics.

$YELP Strong user growth, strong mobile growth.

? Jeff Reznik (@jeffreznik) Apr. 30 at 05:07 PM

Two years ago, Google dominated mobile search ads, taking in 82.8% of the $2.24 billion market, according to eMarketer. But Google's share has dropped since then, as niche search apps became more commonplace. This year, eMarketer estimates that Google will own just 65.7% of the $9.02 billion mobile search ad market. The remaining 27.3% will be split by Yahoo! (YHOO), Microsoft's  (MSFT) Bing, Yelp and other category-specific search applications.

Yelp in particularly has seen its share of mobile ad dollars skyrocket. eMarketer estimates that Yelp's mobile search revenues grew 311% in 2013 and will grow 136% this year to hit $119.4 million. The research firm projects that Yelp's mobile ad dollars will triple by 2016 and account for about 2% of the mobile search ad market.

Yelp's 2% of the market doesn't really pose a threat to Google. But, all the little bites from the small fish in Google's mobile search ad pond add up. And eMarketer's projections indicate that Google will start to feel the pinch from stolen share by 2016, when it will have less than 40% of the market.

Some on StockTwits believe that Google may choose to fight share declines by purchasing some of its smaller competitors. And they believe Yelp could be a key target.

$YELP Going higher. Great mobile monetization. Excellent acquisition target for Yahoo or maybe Google.

? Megaas2000 (@Megaas2000) Apr. 30 at 06:23 PM

Yelp bears say there's little chance of that happening. With a market cap of $4.72 billion and a price-to-earnings ratio of 204 times forward 2015 earnings, they argue that Yelp is too overvalued to warrant a larger company making a bid. Even Yahoo!, with its tens of billions of post-Alibaba IPO cash, they say, won't bother to snap up the company at this valuation.

$YELP needs to come down to earth. $30-40 seems about right. Then it's attractive to someone bigger to snatch up for the mobile growth

? a?¢ZI©ZI©a?¢ (@AgentZero) Apr. 30 at 04:43 PM

But others argue that Yelp is the way to play mobile. And they see the $66 stock rising by 85% by year-end.

$YELP -The best way to play mobile., Looking to add as I think this stock could see 120 by year end.

? David Shack (@buckabucka) Mar. 26 at 09:04 AM

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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