NEW YORK (TheStreet) -- As Minnesota dentist Walter Palmer has found out, killing a lion that was lured off an animal reserve can bring about the wrath of the public upon your Yelp (YELP) - Get Report page. So much so that the Yelp page for Palmer's dental practice had to be shut down after he had been found to be the killer of the beloved Zimbabwean lion, Cecil.
Unfortunately for Yelp, the negative comments for Palmer are but a microcosm of the company's broader issues.
The outlook for the company is looking even rougher amid an ongoing spat between Yelp and Google (GOOG) - Get Report (GOOGL) - Get Report that threatens to disrupt, if not knock out the local search-and-recommendation company altogether.
"[Google's] search results have been altered so that Yelp reviews are no longer prominent, thus making them far harder to find," said Rob Enderle, principal director of tech research firm the Enderle Group. "It does look punitive, and supports the argument that Google is aggressively trying to put Yelp under."
Jefferies analyst Brian Fitzgerald noted that Google is the single-largest source of search traffic going to Yelp's site, and made up more than half of the visits from so-called "unbranded" Internet searches in both 2012 and 2013. "Yelp depends on maintaining a prominent presence in search results for queries regarding local businesses on Google," Fitzgerald said in a research note.
Yelp's issues with Google come at one of the worst times for the company.
Investors recently drove Yelp's shares down after the company cancelled plans to explore selling itself. Yelp shares shed more than a quarter of their value following a disappointing sales forecast and upheaval in its boardroom.
Late Tuesday, Yelp said it now expects to report full-year revenue of $544 million to $550 million, down from an earlier estimate of $574 million to $579 million. The company said it would eliminate display ads by the end of the year and focus its efforts on selling native and local ads. Display ads made up just 6% of Yelp's second-quarter sales, while local ads accounted for 81% of the company's revenue during the period.
The forecast came at the same time Yelp reported second-quarter revenue of $133.9 million, a 51% increase from a year ago, but swung to a loss of 2 cents a share from a profit of 4 cents a share in the prior-year's quarter.
"Yelp is suffering the same fate as many other flash in the pan companies before them," said Jeff Sica, president of Sica Wealth Management, who doesn't own shares in Yelp. "Their business is based off of user reviews and there is very little keeping those users exclusively on their platform. And Google Reviews is becoming more and more popular and will soon eclipse Yelp because of their company name."
One of the main knocks against Yelp of late is that the company's bread and butter service, allowing consumers to post reviews of businesses and services, is, in effect beginning to turn on itself. Even the reaction to Palmer's killing of Cecil the lion was loaded with comments threatening the dentist, who claimed that he didn't know that Cecil was the lion he shot until after he killed the animal.
"The core problem with Yelp is that it isn't trusted anymore. Too many reports of shills and trolls and griefers operating on the service," Enderle said. "A review site where few trust the reviews has very little value and while the firm has worked to improve the quality of reviews they have invested far too little on fixing the impressions surrounding their brand."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.