The Next Social-Media Lockup Expiration Sell-Off Is Tomorrow

Brace yourselves, Yelp (Nasdaq: YELP  ) investors. Tomorrow's going to be a rocky, and likely bloody, day in the market. The social reviewer went public on March 2 this year, and as usual, a number of insiders and early investors were subject to lockup provisions barring them from unloading their shares immediately.

The lockup period was 180 days from the prospectus date, which puts the fateful expiration at tomorrow, Aug. 29. Shares have already been under pressure over the past week or so leading up to the known date, down 8.5% in the past week alone as we head into a date that should be circled red on investors' calendars.

We're talking about 52.72 million Class B shares that will be unshackled, potentially let loose into the market. That's massive relative to Yelp's three-month average daily trading volume of just over 700,000 shares, as well as the total 7.1 million shares sold in the IPO. Here are some of the larger shareholders that will be able to dump stock tomorrow if they so choose.

5% Stockholders


% of Total Voting Power

Bessemer Venture Partners Entities

11.66 million


Entities affiliated with Elevation Partners

11.63 million


Benchmark Capital Partners

8.4 million


Max Levchin, chairman

7.1 million


Jeremy Stoppelman, CEO

5.9 million


Source: Prospectus.

Rival reviewer Angie's List (Nasdaq: ANGI  ) shares have mercilessly tanked since its lockup expiration on Aug. 14. Shares lost 16% that day alone and even tapped a new all-time low today as the pain continues, down a total of 32% since the expiration. Yelp investors are sure hoping for a different outcome.

Elsewhere in the recently public social media sector, Facebook (Nasdaq: FB  ) dropped 6.3% on its lockup expiration earlier this month and has also continued lower as investors question its lofty valuation and monetization abilities. Social gamer Zynga (Nasdaq: ZNGA  ) also sold off by 8% on its fateful day, despite its attempt to have an orderly unloading of insider shares through a secondary offering.

Chances are Yelp will follow in the same footsteps -- the real question is how bad will it be? Tomorrow the market will likely hear shareholders yelping in pain.

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Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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