Zynga Stock Falls 5% as Retail Investors Get Sandbagged
Zynga Inc. (NASDAQ:ZNGA) made its highly-anticipated IPO on Friday. Unfortunately for first day buyers, by end of the stock had fallen 5%.
The social gaming network opened with a $10 price tag after hoping for a target of $8.50 to $10. Zynga raised $1 billion on 100 million shares and rose as much as 11.5% before closing down 5% to $9.50.
What caused the decline?
According to the New York Times, the stock is part of the broader IPO market that has seen new publicly-traded technology stocks defeated by macroeconomic problems and nervous investors. Zynga joined other social media companies such as Pandora Media (NYSE:P), LinkedIn Corp. (NYSE:LNKD) and Groupon (NASDAQ:GRPN) that endured mix results on their first day of trading.
Renaissance Capital, an IPO advisory firm, noted from data that 42 technology companies on their first day of public trading saw their stock price on average jump 20.4% but subsequently saw 15% declines.
Zynga brushed off any concerns about the stock’s price drop. COO John Schappert said he had no regrets for the IPO’s timing or its structure at 14% of total shares, representing the largest tech IPO in 2011.
Schappert said, “We’re not looking at it today or tomorrow, or what we could have squeezed out. We’re looking at the long run.”
Market watchers will keep their eye on Zynga to get a feel for the market as Facebook prepares to go public in 2012, most likely in the second quarter. Its market value may come in higher than $100 billion.
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