By Colleen Taylor
Facebook (NASDAQ:FB) this afternoon released a new feature called "Nearby" that lets users search and review businesses such as restaurants, hotels, and bars -- and it looks like Wall Street received the memo quite quickly.
The stock price of reigning online search and review site Yelp (NYSE:YELP) started going down precipitously almost immediately after news of Nearby emerged at around 2 p.m. ET. Within 20 minutes after Nearby launched, Yelp's stock had taken a swift drop of more than 3.65% to as low as $18.50 a share. The next couple of hours brought ups and downs and a bit of a recovery, but the stock still closed for the day down 2.72% at $18.93 a share.
Of course, the nature of the stock market is like a horse race, so we shouldn't read too much into this just yet. But the initial response from the investor community seems to be that Yelp may well have a formidable new competitor on its hands. And, to be fair, it is by no means the only company in this position -- it's just one that we can monitor on the public stock market, thanks to its (very successful) March 2012 IPO.
As my colleague Josh Constine wrote in his hands-on review of Facebook Nearby:
Should Yelp, Foursquare, and other local discovery startups be worried? Yes. …[Facebook Nearby] might not have the long-tail of reviews or advanced spam protection of Yelp, but it knows where your real friends go.
Facebook also has a leg up on many of other players in the space when it comes to monetizing its content. It will be interesting to see how this plays out, but for now there is certainly at least one tangible impact.