Yelp (YELP): Evaluating Valuation After New AI Partnership With Hatch Expands Service Provider Capabilities

Yelp (YELP) just announced a collaboration with Hatch that leverages advanced AI-powered integrations for service providers. Through this partnership, Hatch’s AI agents can now interact with customers from initial Yelp inquiries to appointment scheduling.

See our latest analysis for Yelp.

Yelp’s share price hasn’t had an easy ride this year, slipping 26.3% year-to-date and marking a 12.9% retreat over the past month. While new collaborations like the Hatch integration hint at a push for growth and improved customer engagement, the latest one-year total shareholder return of -20.3% shows that investor confidence is still recovering, with long-term gains yet to materialize.

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Given Yelp's recent slide and the potential upside from AI-driven partnerships, investors are left wondering: does the current valuation reflect an overlooked opportunity, or is the market already factoring in future growth prospects?

Most Popular Narrative: 16% Undervalued

With Yelp's narrative fair value set at $34.44, the current market price of $28.80 suggests there is a gap that has yet to close. The key assumptions and drivers behind that fair value present a mix of optimism and uncertainty.

The rapid adoption and expansion of AI-powered features like Yelp Assistant and the rollout of new entry points (including to logged-out users) are expected to boost overall user engagement and the stickiness of the platform. This should contribute to increased lead generation and higher advertising revenues over time. Strong momentum in AI search API usage and data licensing revenue demonstrates Yelp's growing value as a data partner for emerging AI-powered search players. A $10 million annual run-rate has already been achieved, with significant upside potential for diversifying and expanding revenue streams.

Read the complete narrative.

Curious what is powering such an optimistic outlook? The narrative draws bold lines between evolving platform features, expanding earnings, and a future profit multiple not typical for legacy digital brands. Want to discover the surprising foundation behind that valuation gap? See exactly which numbers could be the X-factor in this story.

Result: Fair Value of $34.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent declines in key revenue segments and growing competition from digital advertising giants remain potential hurdles for Yelp's rebound story.

Find out about the key risks to this Yelp narrative.

Build Your Own Yelp Narrative

If you have a different perspective or want to dive into the numbers on your own terms, you can craft your own point of view in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Yelp.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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