shares have risen 22% today. And that's good news for anyone who
Few expected a surge from Yelp today. It's been 180 days since
the user reviews website
, which means today was one its scheduled lockup releases.
A lockup release is when an agreement between the underwriters
of an IPO and some of the stock's early investors expires. Lockup
agreements are a way for the underwriters to limit volatility in
a stock by "locking up" major investors - venture capitalists,
company executives, etc. - for a given period of time.
Those periods of time typically last between 120 and 180 days.
Once a lockup agreement expires, investors are free to sell off
Yelp's 180-day lockup release was today, and 52.7 million
shares were free to be traded. Wall Street was bracing for a
major sell-off, preemptively knocking the social media stock down
31% in the last three weeks entering the day.
A further sell-off was expected. Instead, the reverse has
happened. Investors are snatching up Yelp shares today at the
fastest clip in the stock's brief six-month history.
Facebook investors should take solace in Yelp's surprising
lockup release-day surge.
As you likely know, Facebook held its initial public offering
on May 18. So its lockup agreements are starting to expire.
The first lockup release freed some 400,000
, and the stock promptly fell 10% in two days.
With 1.5 million more shares set to be released from their
lockup agreements in the next six weeks, the general consensus
has been that the Facebook sell-off isn't over yet.
However, with Yelp having its biggest one-day surge in the
midst of a lockup release, perhaps Facebook isn't as doomed as we