Online reviews site Yelp Inc (NYSE:YELP) has seen a sharp spike in its shares which even a lock-up expiry on August 29 was not able to dent.
In the last few weeks the stock has risen more than 30 percent, which analysts say is due to short covering and optimistic outlook of the company's earnings.
The shorting of the stock was done in the run-up to its lock-up expiry as many investors were fearing large sell-off of shares as happened in the case of social networking site Facebook and daily deals site Groupon.
However on the day of expiry when investors saw that large insider investors were sticking to their holdings and not offloading them, it created an atmosphere of confidence and triggered a wave of buying and short-covering of open positions.
The question now is whether this rally can be sustained over a longer period of time.
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Yelp essentially provides a platform where customers and users of products can review local businesses and recommend them based on their own experiences.
Prospective customers can see the ratings of businesses like hotels, restaurants, dental services etc., read reviews and make informed purchase decisions.
The local businesses and service providers advertise on Yelp which gets its revenues therein. It also gets additional revenues from extra services such as Yelp deals.
The company has also successfully monetised its mobile subscriber base as Chief Executive Jeremy Stoppleman recently said that click-throughs on its mobile site has shown significant improvement compared to desktop traffic.