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My colleague Gary Kaminsky made a good point about Yelp Wednesday morning: despite a large lockup expiring (52 million shares), the stock almost immediately began trading up, and although the volume was heavy (about 5 million shares mid-morning) it was nowhere near the lockup.
That is interesting.
Traders will typically short a stock going into a lockup expiration, and indeed that appears to have happened, with the stock going from $25 a couple weeks ago to below $20 in the last few days.
Why would the stock trade up on the day the lockup expires? There are several likely explanations:
1) There is less to sell than anticipated, because the vast majority of the 52 million shares are held by executives or directors of the company. That doesn't guarantee there won't be sellers, but directors and executives can be a little more "sticky" as holders of stock than, say, a low-level employee. By the way, insiders own the stock at $1.12, David Menlo at IPOfinancial.com tells me.
2) There has been considerable excitement around the announcement (made a couple months ago) that Apple would integrate Yelp into its upcoming iOS 6 operating system. This is a huge deal: Yelp will be integrated into the new Apple Maps, as well as Siri. There will also be a new Yelp app.
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