Fears of Yelp Inc(NYSE:YELP) shares tanking on the
expiration of the lockup period proved to be baseless. The fact that the scrip rose sharply, by 22%
to be exact, shows that major shareholders are not using the chance to sell
their shareholdings acquired before the 8-year-old company’s March IPO.
The 180-day period in
which early shareholders are not allowed to sell came to an end on Wednesday,
and Yelp was expected to suffer the fate of Facebook Inc. and rival Angie’s
List Inc. These two scrips had been
battered on lockup expiration as early investors had dumped their
holdings. Facebook’s first outsider
investor, Peter Thiel had sold a whopping 20 million shares which constituted
most of his holding and retained only a small chunk. Instances of heavy selling like this one had
raised doubts about investor confidence in these companies.
Can YELP Continue To Move Higher? Find Out Here
Insiders of other companies like Groupon Inc. and Zynga Inc.
had also exited in hordes at the end of the lockup period, resulting in sharp
falls in stock prices. Many predicted
that Yelp’s investors would behave on similar lines and sell in droves.
This fear had shaved off 30% of the stock price and
persisted till early Wednesday, when the scrip was in a downtrend. However, it slowly became evident that there
was going to be no investor exodus. This immediately changed the prevailing
sentiment, bringing about a surge in the stock price. Only 7.4 million shares were traded
indicating that the large investors were going to stay put.
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