Yelp shares soar 22% after lockup period ends

Yelp stock sees largest single-day gain since IPO; shares still well below all-time high of $28-plus

Financial trends and news by Steven Loeb
August 29, 2012
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After stories of companies like Zynga, Facebook and Groupon constantly hitting new lows in terms of stock, it's nice to see a company thriving for once.

Yelp saw its stock rise over 22% after its lockup period ended on Wednesday, its largest one-day advance since its IPO in May.

Around 53 million shares of Yelp stock were freed, which would typically mean the stock would be heading down, as investors usually sell a portion of their stock at the first chance they get.

Instead of cashing out, though, it seems as though many of Yelp’s big investors decided to stick with the company, a very good sign for Yelp’s long-term health.

Lockups are a common practice for companies to set up as they go public. They restrict big investors, and company executives, from flooded the market.

Yelp shares rose $4.11 in regular trading, ending at $22.37. Shares came down slightly, 0.54%, in after hours, so the stock currently sits at $22.25. While shares are well above the $14 range they traded at in early June, they're also well below the all-time high of $28.09 back in March.

Other recent lock-ups

This news seems even better than compared to how other big name companies performed after their lockups ended.

After its lockup period ended earlier this month, and over 271 million shares of Facebook were freed up, the stock hit its lowest levels yet, dropping to 50% of its IPO price.

Facebook has other upcoming lockup dates, including October 15 through November 13 when directors and employes can release 243 million shares, then November 14 when more VCs and Mark Zuckerberg can unload up to 1.3 billion shares and the December 14 when later stage VC can release up to 149 million shares.

Groupon’s lockup ended in June, releases 90% of its shares, Groupon saw its stock fall nearly 9%, to more than 50% below its initial public offering price of $20.

Groupon had extended its lockup in April, which was set to expire on May 2, following a revision of its numbers for the fourth quarter in 2011.

Other Yelp news

August is turning out to be a good month for the user review website.

At the beginning of the month, Yelp stock surged after a better than expected quarterly report.

Yelp’s net revenue was $32.7 million for the quarter, up 67% from $19.6 million in the same period a year ago. The company’s net loss was $2 million, or 3 cents a share. The company had a net loss of $1.17 million, or 8 cents a share, a year ago.

Analysts had been expecting a loss of 6 cents a share, and revenue of $30.7 million for this quarter. 

Additionally, Yelp upped its revenue expectations for the full year to $135 million to $136 million, from $128 million and $132 million.

The company also saw its monthly unique visitors grow to over 78 million per month, up 52% over the same quarter in 2011.

Yelp has updated its projected earnings for the third quarter of 2012 from $34.5 million to $35.5 million.

Annual growth is expected to be between $135 to $136 million, up from its previous projection of $128 million to $132 million. Revenue is expected to be up 62% from 2011. News of the better-than-expected quarter and outlook sent Yelp shares soaring nearly 15%.

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