Social media company Yelp Inc. (NYSE: YELP) has been a success story since its IPO in March. The shares went out at $15 and more than doubled to near $32 before beginning a slide to around $18 today.
On August 8 the shares hit a four-month high of $26.46 before turning on a steady southward course. The reason, of course, is the end of the lockup period on shares held by venture investors, company managers and vested employees. All told another 52.7 million shares could hit the market tomorrow, more than tripling the company’s float.
Similar lockup expirations have weighed heavily on other tech companies, including Facebook Inc. (NASDAQ: FB), Groupon Inc. (NASDAQ: GRPN) and Zynga Inc. (NASDAQ: ZNGA). Between now and next May, another 1.7 billion shares of Facebook stock will be released from lockup.
Yelp may get some help from the fact that it had a strong second quarter. Revenue was by 67% and the company raised its forecast. None of the others could say that. That doesn’t mean that there won’t be carnage tomorrow, but it could mean that the stock will recover quickly.
Yelp’s shares are off more than 4% today at $18.28 in a 52-week range of $14.10 to $31.96.
Paul Ausick
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