The euphoria surrounding a red-hot initial public offering often doesn’t last long. Investors in Yelp Inc. may be discovering that.
Shares of the Internet-review site declined nearly 15% on Monday, an about-face from their sizzling 64% surge on the company’s first day of trading Friday. Yelp slid $3.59 to $20.99.
It’s common for IPO shares to cool down in the aftermath of a blistering IPO, and is not necessarily a bad sign for the long-term prospects of a company or a stock.
Still, it’s a reminder that investors who buy in on an IPO’s first day can get hit hard, at least in the short-term. An investor who purchased Yelp at its $26 peak Friday already has lost more than 19%.