Yelp falls 9% as Facebook tests local business reviews
SAN FRANCISCO — Facebook is quietly testing a new feature that guides users to reviews of local businesses, heating up competition with Yelp and Angie's List.
The feature, spotted by technology blog Search Engine Land, says it helps users "find local businesses with the best Facebook reviews and ratings" from painters to plumbers to pet groomers. The feature is available only on desktop. On mobile, Facebook has a feature called "Nearby Places."
"We're in the early stages of testing a way for people to easily find more Pages for the services they're interested in," Facebook spokesman Mike Manning said in an emailed statement.
Shares of Yelp (YELP) fell about 9% to $26.87. Shares of Angie's List (ANGI), however, ended the day up 2% at $9.24.
#MARKETS16: Stock picks | 10 things | Key questions | Bull or bear?
Yelp declined to comment.
In a note to clients, Darren Aftahl from Roth Capital Partners reiterated his sell rating on Yelp and a $17.50 price target. He says Facebook's test "only strengthens our long-term thesis that Yelp's business prospects and user growth could be further challenged in local."
"Consumers benefit most when there are multiple avenues for reliable information and we welcome more of them to the market," Angie's List spokeswoman Debra DeCourcy said in an emailed statement. "We've been in this business for more than 20 years, so we have more depth than most but we're also much more than a review site."
Angie's List recently rejected a $512 million takeover offer from IAC/InterActiveCorp, but analysts say other companies are likely to show interest in buying the review site.
Facebook courts small businesses with updated Pages
Facebook has been stepping up its outreach to small businesses, adding features to make it easier for these businesses that maintain "pages" on Facebook to get noticed by and respond to consumers, especially on mobile devices.
Small businesses can create pages on Facebook that contain a section that lets users post and read reviews. Facebook said this month that it has more than 50 million active business pages, up from 40 million in April.
Facebook is competing with tech giants such as Google and Amazon for the online loyalty and advertising dollars of small businesses.
Follow USA TODAY senior technology writer Jessica Guynn @jguynn