Yelp (YELP) trades down over 4% today on a downgrade by UBS. Analyst Eric Sheridan suggests the company will lose out to Alphabet (GOOGL) and Facebook (FB) in the local advertising market. Our key concerns with Yelp are: a) traffic growth continues to decelerate; b) the rising costs (marketing & salesforce hiring) to produce growth; c) investments (& losses in International) which do not appear to be scaling; and d) increased competition in key growth areas (such as Eat24 – food ordering). An additional worry is the lack of operating profit to re-invest to drive innovation that might counter-act the platform strength of Google and Facebook. These issues are why Yelp is worth only $1.5 billion despite the holy grail opportunity in the local ad space and revenues approaching $700 million this year. The ability to bypass Google via the mobile app provides a disruptive opportunity not addressed by the analyst. The engagement by mobile users remains very strong. The analyst research was no help. Buy the dips in Yelp. Disclosure: Long YELP