Wednesday, August 22, 2012

Yelp Inc (NYSE:YELP) Shares Feel the Heat Ahead of Lock-in Expiry Next Week

Another social networking company’s stock, another expiration. This time it’s that of Yelp Inc (NYSE:YELP) whose imminent post-IPO release of locked-in shares is putting a downward pressure on the stock price.

The online provider of consumer reviews went public in March this year, offering 7.15 million shares at$15 each. Another 52.7 million shares which are locked-in are due to be available for sale as the lock-in expires on August 29, just a week from now.

Shares in the company have already slumped about 24 percent in slightly more than a wee k and on Tuesday the shares closed down more than 6 percent at $19, going below its IPO price. 

Will Yelp go the Facebook way, which is seeing its shares hammered after the expiry of the lock-in shares that took place last week?

How Should Investors Trade YELP Now, Find Out Here

There are some differences between Yelp ad the social networking site. For one, it does not have inside investors holding huge chunks of stock. The venture investors, backing the company, still have significant holdings in it.

Some of its prominent investors are Bessemer Venture Partners with22 percent stake, Elevatin Partners with 22 percent and Benchmark Capital with 15.7 percent.

Its chairman Max Levchin holds 13.6 percent while Chief Executive Jeremy Stoppelman has 11.1 percent.

Unlike the social networking site Yelp has been a better performer in the market and has largely traded above its IPO price till the fall on Tuesday.

On August 8, it hit a high of $26.46, climbing from the low of $18.82 that it had hit on Aug 1.

Of course, the selling pressure that the stock is facing could be purely due to sentiments as investors have the experience of Facebook where insider investors have been dumping the shares the first chance they got exit the company.

It remains to be seen how the investors treat the shares that become available for sale.

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