Inside investors in Yelp Inc(NYSE:YELP, whose shares were released from lock-in for sale in the market on Wednesday, preferred to hold to the stock much to the relief of Wall Street and investors.
Shares in the company rose 22.51 percent on Wednesday with the company's larger investors showing their confidence in the company by sticking on to it, rather than dumping it.
Other Internet companies, who have had a similar release of lock-in shares recently, have not been so fortunate. Prominent among these are social networking site Facebook and daily deals site Groupon both of which saw early stage investors dumping their holding at the first chance they got after their IPOs.
Their stocks plunged because some of their early backers pared their holdings, raising questions about whether the insiders had lost faith in the companies' long-term prospects.
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There had been apprehensions that Yelp, which gets its revenues from product reviews on its site, might meet the same fate. This had led to investors selling their holdings in the run-up to Wednesday's expiration, leading the stock to fall about 30 percent in three weeks.
The shares initially sank on Wednesday, fearing a sell-off but then when it was found that no insider were dumping en masse there was a turnaround and the shares rose more than 22 percent to close at $22.37. This is the biggest increase in the share price since it went public when its shares had risen by 64 percent.
The list of early Yelp backers who could have unloaded some of their stock Wednesday included venture capital firms Bessemer Venture Partners, Elevation Partners and Benchmark Capital Partners, as well as former PayPal executive Max Levchin. That group collectively owns about 39 million Yelp shares. Yelp CEO Jeremy Stoppelman also became eligible to sell his 5.9 million shares of the company.