- Associated Press - Friday, May 18, 2012

NEW YORK (AP) - The lukewarm response to Facebook Inc.’s initial public offering sent shares of other social-media companies tumbling Friday.

The sell-off is a sign that Facebook is now a bellwether for the small sector, which is mainly composed of companies that have gone public in the last year. Facebook has a market capitalization more than 10 times larger than that of LinkedIn Corp., the closest equivalent already publicly traded.

One of the biggest losers was game-maker Zynga Inc., whose shares fell so fast that trading was halted soon after Facebook started trading.

When the halt lifted, Zynga’s shares rebounded so fast that they prompted another halt. They finally resumed trading at 1:35 p.m. EDT, sinking to close at $7.16. That was down $1.11, or 13 percent, from the day before.

Shares of the San Francisco-based company hit a low for the day of $6.40, its lowest level since it went public in December priced at $10 a share.

Zynga makes FarmVille, CityVille and Mafia Wars, and gets the bulk of its revenue from Facebook users.

Facebook is somewhat dependent on Zynga as well. It gets most of its non-advertising income from the sale of “credits” for Zynga games, which allow the purchase of virtual objects like cows for FarmVille.

After pricing at $38, Facebook shares opened at $42.05 on the Nasdaq market. The shares quickly fell back to their IPO price. They rebounded in the early afternoon but then sank back toward the offering price to close at $38.23.

Shares of Yelp Inc., which lets people review local businesses, also hit an all-time trading low in Friday at $17.70. It went public in March at $15 a share and closed its first day of trading at $26.11. The shares closed Friday at $18.64, down $2.69, or 13 percent.

For most of the social-media companies, Friday’s declines followed smaller declines Thursday. Stern Agee analyst Arvind Bhatia suggested that investors may have been freeing up money to buy Facebook shares.

Shares of online coupon provider Groupon Inc. closed Friday down 83 cents, or 6.7 percent, at $11.58, after tumbling to $11.33 right after Facebook shares started trading.

Since going public in November at $20 a share, the Chicago-based company’s shares have traded between $9.63 and $31.14.

Shares of LinkedIn, the business-oriented social network, fell $5.93, or 5.7 percent, to close at $99.02.

The stock of Pandora Media Inc., which streams music online, closed down 75 cents, or 7.1 percent, at $9.77.

Jive Software Inc., which creates social networks for businesses, saw its shares fall $1.07, or 5.8 percent, to $17.36.


AP Business Writer Bree Fowler contributed to this report.

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