Zynga stock settles at $9.50 for first trading day

Zynga's stock price was expected to go higher than its initial $10 a share price on the first day of trading on Friday. Instead, as Forbes.com reports, the stock for the Facebook-based game publisher actually ended its first day on the NASDAQ stock market in the red, losing 5 percent to settle at $9.50 a share.

What happened? Usually tech-based stock IPOs are greeted, at least on the first day, with a lot of interest by investors. Also Zynga, unlike a lot of other tech companies that have gone public, actually makes a solid amount of revenue and profits from its business model, which is mostly tied into selling virtual items for its games like Farmville and Cityville.

Investors may be wary of buying stock in Zynga, at least in part, because it has a business model that relies on virtual item purchases from its players. Another factor is that most of the company's games use Facebook. Some investors may not care for the fact that Zynga's revenues are tied in so deeply to Facebook, who could change its policies about how companies gain revenue from the social networking site.

In the end, Zynga has to prove to its new stockholders that it can continue to grow its business and also not be reliant as much on Facebook for its money. If it can do that, the stock price will start growing.

Report a problem with article
Previous Story

PS Vita portable game console launches in Japan

Next Story

Microsoft and partners may be working on new Yahoo offer

17 Comments

Commenting is disabled on this article.

downhillrider said,
this was a way for all the investors to make money before they cash out and no one will remember zynga

Would have been a great time for ticked-off employees to dump all their stock (which Zynga requested they return) into the market and drive down the price. And short a bunch of shares, too!

ACTIONpack said,
Zynga has not been making good money like before. If Zynga was smart then they should get someone to buy them.

The mere fact that Zynga is *profitable* sets them apart from most software IPOs (it sets them apart from LinkedIN, for that matter, let alone Groupon) - yet Zynga is trashed, while both Groupon and LinkedIn are praised.

PGHammer said,

The mere fact that Zynga is *profitable* sets them apart from most software IPOs (it sets them apart from LinkedIN, for that matter, let alone Groupon) - yet Zynga is trashed, while both Groupon and LinkedIn are praised.

Since when is the giant pig-**** that is Groupon praised?
Clearly, your stock "advice" should be kept to yourself.

ahhell said,

Since when is the giant pig-**** that is Groupon praised?
Clearly, your stock "advice" should be kept to yourself.

I was referring to the fact that not a single person here bashed Groupon
s IPO - which went forward as scheduled *during* a delay of Zynga's IPO (Zynga's IPO was originally planned to launch prior to that of Groupon).

Further, did I not state that I didn't (and haven't) recommend ANY IPO - of any company - since that of Google? MY leeriness of IPOs has nothing to do with Zynga itself; I'm simply leery of IPOs in general. (Further, I pointed out that sovereign debt has a higher yield than corporate equities right now - the exception being US debt.)

Listen to the lot of you - because it's the cool thing to do, you're basically piling on the beating up of Zynga, their IPO, and even Facebook. Zynga actually delayed their IPO three times (for reasons having more to do with the IPO market in general, as opposed to Zynga in particular), and did actually follow through (that more often than not doesn't happen - what usually happens is that the IPO gets withdrawn). The issue with IPOs in general (not just that of Zynga, which is actually one of the more solid, from a stock-dividend POV, IPOs to come out this year) is that all IPOs are competing with sovereign debt for money this year - Zynga's IPO happened to have the extremely bad timing to arrive simultaneously with a massive debt issuance by Italy and Ireland (both of which have coupon rates higher than Zynga's divident yield). Lastly, Zynga's games are entirely social-network-linked; however, they aren't just tied to Facebook - there is also a similar linkage to Yahoo, and it wouldn't surprise me to see one via Windows Live in the future. And as far as bugs go, in what way are Zynga's games worse than not just other socially-linked games, but even PC or console games (BF3, MW3, etc.)? I don't just follow IT and tech, but I also follow stocks/bonds/markets/IPOs - the un-fun side of large business (including IPOs) - it's why I didn't lose so much as a shirt-button when the tech-stock bubble imploded (and why both Bloomberg.com and cnbc.com are among my Favorites but fool.com is not). I didn't recommend buying Zynga on the launch of their IPO - however, I haven't recomended getting in at launch of ANY IPO - of any company - since Google's IPO. (An interesting factoid - Zynga actually has a higher cash flow right now than Google did at the same point. Not burn rate - actually, Zynga was profitable pre-IPO - but earnings. Google is where it is because of what their IPO enabled them to do.)

Adamb10 said,
Zynga is going to come crashing down if/when Facebook starts to fall.

facebook is not the only social network

Adamb10 said,
Zynga is going to come crashing down if/when Facebook starts to fall.

Zynga will come crashing down, but it will have nothing to do with Facebook. It will be because their games are bug laden nightmares and their users will eventually have enough.

I greeted Zynga's IPO with a complete Facebook ban on my profile, uninstalling all games, and removing all fake friends associated with those games. I actually quit a few months back, but I REALLY don't want to be called a damn user of their crap.

Farmville was a shortlived fad, but now that's over with. I sure wouldn't want to invest in a company that only makes Facebook games that lose everybody's interest after a year. Not exactly a stable way to keep the company in the green in the long run. All it will take is a few games that nobody cares about, and it will bring the company to its knees.

What happened was you didn't get 100 facebook friends to help you raise your IPO then the barn collapsed killing your animals and you lost your farm

neufuse said,
What happened was you didn't get 100 facebook friends to help you raise your IPO then the barn collapsed killing your animals and you lost your farm


But I bought the points I needed for 4.99!

There was so much news about this. I wonder if the whole thing was over publicised, which put investors off. A lot of bad things were said about this IPO.