Shares of Yelp Inc. (Nasdaq: YELP), the provider of online reviews of local businesses and restaurants, surged more than 25 percent Wednesday as the lock-up period for insiders expired, allowing them to sell stock in the San Francisco-based company for the first time since its March 1 initial public offering.
Shares rose $4.14 to $22.40 at midday, after surging as high as $22.89 earlier. Yelp raised $107.3 million in the IPO. Shares had risen 25 percent through Tuesday, as shortsellers bet against the company, much as they did against Facebook (Nasdaq: FB), the No. 1 social networking site, whose shares have fallen 50 percent since its May 17 IPO that raised $16 billion.
Because insiders, including CEO Jeremy Stoppelman and Chairman Max Levchin haven't filed plans to sell their shares, shortsellers were required to buy back the Yelp shares they'd shorted to cover their positions, a reason why more than 5 million shares were traded by midday, five times average volume.
As well, Yelp has said it's collaborating with Apple (Nasdaq: AAPL), the world's most valuable technology company, on providing local content for integration into new models of the iPad and iPhone. Unlike Facebook, Yelp reported second-quarter revenue rose 67 percent, more than twice that of Facebook.
The surge brought Yelp's market value to $1.37 billion, still a long way from the $1.95 billion record it set earlier this year.
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