Why a Yelp Acquisition May Not Mean Other Deals Are Imminent

 NEW YORK (TheStreet) -- Even if Yelp (YELP) , were to get acquired sooner than later, that doesn't necessarily mean other companies like it, including TripAdvisor (TRIP), Angie's List (ANGI) or others are likely to get acquired anytime soon.

"I think it's been ripe like that for a while," said Brian Blau, an analyst with Gartner. "But I don't think it will be a land rush. These sort of companies, where rating things becomes a favored behavior of consumers, you see it all the time now. As there are a lot more companies doing this, the data and people that come from the recommendations become a lot more valuable."

Since Yelp's founding in 2004, the company has made a name for itself as one of the premier online sites for consumers to  rate and review local businesses. Many of those same businesses pay to advertise with Yelp, and advertisements provide the majority of the company's revenue. Many other companies have jumped on the online review and recommendation bandwagon in various areas, such as TripAdvisor, which specializes in travel and hotel reviews from consumers; Angie's List and ReachLocal ( RLOC) , which offer references and connect consumers for professional-service providers, and OpenTable, which lets people make online restaurant reservations in addition to reviewing the places they've eaten.

While no sale of Yelp is a guarantee at this point, the fact that what is arguably the biggest name in a nascent industry may be shopping itself around is enough to grease the wheels of speculation about whether the online review and recommendation sector could be in line for a slate of acquisitions.

In fact, it might be argued that OpenTable actually kick-started a slow-moving round of review and recommendation company acquisitions last year, when online travel agency Priceline (PCLN) acquired it for $2.6 billion in cash. However, there is also a school of thought that suggests Yelp possibly putting itself up for sale may mean the company is an outlier, based on its own recent business performance, rather than the next domino to drop in what will become a line of similar acquisitions.

When Yelp reported its first-quarter results in April, the company posted a loss of 2 cents a share on revenue of $118.5 million. However, while those results were  improved from a year ago, they also fell short of the expectations of analysts surveyed by Thomson Reuters, who were expecting a penny-a-share profit on $120 million in sales. Among the issues facing Yelp was the addition of just 6,200 advertising accounts during the quarter, down from 9,100 in first quarter of 2014.

Jeff Sica, president of Sica Wealth Management, downplayed not just the chance that a Yelp sale will lead to more acquisitions in the online review and recommendation sector, but that buying Yelp would make sense to any possible suitor. Sica said the issues facing Yelp include an "outdated" advertising model dependent upon display ads.

"At this point, I believe this is a lot of hype and won't develop into a major market-shifting event," Sica said. "[Yelp's] is as great service and is very useful for many people, however, I don't see how they are going to grow and expand into a large, revenue-producing company."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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