All signs point to the thesis that Yelp Inc (NYSE:YELP) should’ve been a big winner on Wall Street over the past several years.

After all, the company exists in the overlap of two secular growth markets: digital advertising and on-demand/at-home economy.

Digital advertising has continued to grow at a robust rate as dollars migrate from traditional advertising channels to more targeted and data-rich digital advertising channels. Plus, the on-demand/at-home economy has surged over the past several quarters as technology continues to deliver everything we need right to our doorstep.

Naturally, then, YELP stock should be a big winner, right?

Wrong. Over the past three years, YELP stock has dropped more than 10%.

By comparison, the S&P 500 is up 30% during that stretch. Successful digital advertising peers Facebook, Inc. (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) are each up more than 100%. Meanwhile, on-demand/at-home economy players like Netflix, Inc. (NASDAQ:NFLX) and GrubHub Inc (NYSE:GRUB) are up 300% and 150%, respectively.

With everyone else in Yelp’s markets surging higher, how has YELP stock dropped 10% over the past three years?

Lack of growth. Lack of scale. And lack of profits.

Worse yet, going forward, there will be no lack of competition. And as such, there are serious risks to the longevity of YELP’s business model.

YELP stock isn’t priced for these risks. That is why I remain bearish on the stock.

Here’s a deeper look.

Yelp Faces Serious Headwinds

The whole problem with Yelp is that its business is so easily replicated, and the platform doesn’t have enough scale to fight back against replication.

At its core, Yelp is a place where consumers can discover places to eat, curated by other users through millions of reviews. There really isn’t anything terribly complex about that idea, and it would be pretty easy for a company with a ton of users and a lot of engagement like Facebook, Google or Amazon.com, Inc. (NASDAQ:AMZN) to step in and copy the business.

Moreover, Facebook, Google and Amazon could copy the business at scale and win because Yelp doesn’t really have the size to combat replication efforts from these internet giants.

Yelp has 30 million app unique devices, 155 million reviews, and 177,000 paying ad accounts. Facebook has 2.2 billion monthly active users. Google processes 3.5 billion searches per day. Amazon has more than 100 million Prime members.

Any of these tech giants could take Yelp’s rather straightforward interface and roll it out to their much larger audiences. And it would be a success.

It really is only a matter of time before this happens. Facebook recently launched Local, which has the potential to be a Yelp killer. Google is getting into e-commerce with Shopping Actions and could easily turn that initiative into a Yelp replacement that allows people to order food online and leverage Google reviews to decide where to eat. Amazon Restaurants is already a thing.

In other words, it is only a matter of time before competition starts to erode Yelp’s unique value prop.

Yelp Stock Isn’t Priced for These Headwinds

Yelp stock isn’t priced for this harsh reality of eroding popularity.

Advertising revenue growth at YELP has run around 20% over the past several quarters and years. This growth rate should start to erode over the next several years as competition in both digital advertising and on-demand food discovery ramps up. As such, this is, at best, a 15% revenue growth company.

Profitability is a major concern for this company. Although gross margins run above 90%, operating expenses eat up a huge chunk of those profits. Granted, management thinks that those sky-high opex rates will come down over the next several years with scale, but enhanced competition means that YELP will have to keep investing big into its business in order to compete.

As such, I really don’t see operating margins getting much higher than 15% in five years (management’s long-term guide calls for operating margins north of 20%). Under the assumptions of 15% revenue growth and 15% operating margins, I think YELP can do about $2.20 in earnings per share in five years.

A Facebook/Google-type multiple of 25 times forward earnings on that $2.20 earnings base implies a four-year forward price target of $55. Discounted back by 10% per year, that equates to a present value in the upper $30s.

Bottom Line on YELP Stock

Considering competition is only heating up, YELP stock isn’t worth more than $40 today. I’m a buyer in the low to mid $30s, but above $40, YELP stock looks like a sell to me.

As of this writing, Luke Lango was long FB, GOOG and AMZN.