- Obama military downsizing leaves U.S. too weak to counter global threats, panel finds
- Sen. Tom Coburn vows to slow down budget-busting bills ahead of recess
- Obama fantasizes about more executive power, signs new order on federal contractors
- Clintons call Klein, Halper, Kessler ‘a Hat Trick of despicable actors’: report
- Boehner accuses Obama of ‘legacy of lawlessness’
- Pro-marijuana group claims responsibility for Brooklyn Bridge flag swap
- Young adults shun Obamacare mostly due to cost: survey
- Stabbing attack on transgender girl, 15, was ‘bias motivated,’ police say
- LGBT adults still lean overwhelmingly toward Democratic Party
- Lawmakers rattled by Syria genocide horrors, call on Obama to act
Investors give ‘Farmville’ maker a cold shoulder
Question of the Day
NEW YORK (AP) - As its workers celebrated with hot chocolate and cinnamon buns, Zynga saw its stock dinged on its first day of trading Friday _ an unexpected turn of events for a closely watched public debut seen as a precursor to Facebook’s next year.
Zynga Inc., the online game developer behind “FarmVille,” “Mafia Wars” and other popular time killers on Facebook, raised at least $1 billion in its initial public offering of stock, the largest for a U.S. Internet company since Google’s $1.4 billion IPO in 2004.
But by Friday afternoon, Zynga’s stock fell 50 cents, or 5 percent, to close at $9.50. The stock priced at $10 on Thursday, at the high end of its expected range. It traded as high as $11.50 on Friday before heading into a downward spiral on the Nasdaq Stock Market.
It was far from the eye-popping jump that has been the trend this year for freshly public Internet darlings such as LinkedIn Corp., which saw its stock double on its first trading day.
Zynga’s opening _ with a ticker symbol of “ZNGA” _ was supposed to be big. After all, unlike many others with IPOs, the company is profitable, with more than 220 million people playing its games on Facebook each month.
What this all means for Facebook’s IPO, expected sometime after April, is hard to say. One thing is clear, though.
“A hot IPO is not guaranteed,” said Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital.
Despite the big-name public offerings this year, the IPO market is not in good health. Buyers are skittish and concerned about the high volatility of freshly public stocks, Smith said. Big name or not, investors don’t want to pay sky-high prices for stocks, especially not before a company has proven itself with good earnings reports and analyst ratings.
Seventy percent of the 125 companies that went public this year are now trading below their IPO price, according to Renaissance Capital.
While Friday’s drop doesn’t look good, it’s not devastating for Zynga. Its CEO, Mark Pincus, said the company’s focus is on “delivering great products” that expand audience for social games over the next few years _ and not on the next trading day.
“We didn’t have any expectations coming into this whole process,” he said in an interview. “We decided to go public a long time ago.”
Pincus rang the Nasdaq’s opening bell in San Francisco, a first in the city for a freshly public company. The company’s roughly 1,700 San Francisco employees woke up at the crack of down to celebrate with cinnamon buns and hot cocoa. Zynga also delivered video of the opening ceremony over the Internet to its offices around the world.
Thursday’s pricing gives Zynga a market value of about $7 billion. That’s roughly half of the value of online deals site Groupon, which began trading in early November. Zynga, though, sold a much bigger chunk of its available shares, 14.3 percent compared with Groupon’s 5.5 percent. It’s an issue of supply and demand _ selling more shares means investors don’t have to scramble to get their hands on them.
Wedbush analyst Michael Pachter said stocks trade based on supply and demand on the first day.
In Zynga’s case, he believes the IPO’s underwriters placed more shares with investors who were going to “flip” the stock _ that is, buy a hot stock and quickly sell it to make a profit instead of holding on to it for the long run. All that selling tempered the stock’s price, and other nervous investors started selling, too.
TWT Video Picks
Both parties recognize the Democrats' scam
- Inside the Ring: Israel surprised by Hamas tunnel network
- CRUZ: A tale of two hospitals: One in Israel, one in Gaza
- Chicken pox outbreak puts illegal immigrant facility on lockdown
- Obama military strategy too weak for future security, panel reports
- Report: 40% of weapons sent to Afghanistan are unaccounted for
- Israel surprised by Hamas tunnel network
- CIA admits improperly hacking Senate computers in search of Bush-era information
- Islamic militants seize Benghazi as U.S. evacuates Libya
- 'Big Bang' star Mayim Bialik helps send bulletproof vests to IDF
- 3 African leaders cancel trip to U.S. over Ebola outbreak; Obama still plans summit
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world