Exclusive: Why Yelp stock spiked

In short: Most of the big insiders didn’t sell. Fortune has learned that venture capital backers like Bessemer Venture Partners, Benchmark Capital, DAG Ventures and Elevation Partners opted to neither sell nor distribute any Yelp shares today, despite having the opportunity to do so.

A source familiar with the situation also says that CEO Jeremy Stoppelman (founder & CEO) and board member Max Levchin also held onto their entire positions, but I have not yet been able to get secondary confirmation.

When the insiders didn’t sell, the shorts got squeezed.

What happened here is somewhat specific to Yelp, in that the company originally floated very few shares in its IPO and has the vast majority of its stock in very few hands. Moreover, VCs might not have been thrilled about feeding their LPs to the shorts, who clearly had set up their positions.

But there’s also a broader issue about how Facebook has helped amplify virtually every ill of the IPO and post-IPO process. The notion of tech stocks falling post-lockup is nothing new, but it seems few people paid attention until Facebook (FB) sank a couple of weeks back. “There is a real, genuine concern about what happened after the Facebook lockup,” said one VC who didn’t invest in Yelp. “Obviously there will still be post-lockup sales, but it may not be as common as it has been in the past.”

A Yelp spokeswoman declined to comment on Stoppelman or anything else related to the company’s stock. Also no comment from the aforementioned venture capital firms.

UPDATE: Yelp shares finished up 22.51% to $22.37 per share. Volume was around 8.6 million shares, compared to average trading volume (post-IPO) of around 955,000. Approximately 52 million shares were unlocked today.

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