Zynga shares close at $9.50, below offering price
In a rare stumble among technology companies going public this year, Zynga Inc.'s shares closed 5% below its offering price on the first day of trading on the public stock markets.
Its stock ended Friday at $9.50, down from the company's $10 strike price -- the price at which it sold its shares to institutional buyers, investment banks and preferred investors on Thursday to raise more than $1 billion.
Zynga's first-day miss stands in contrast with the performance of other IPOs from technology and social networking companies this year. In May, LinkedIn Corp. surged 109% on its first day of trading. Zillow Inc. gained 79% its first day out in July. Most recently, Groupon Inc.'s stock popped 31% the day of its IPO.
But most of those stocks have fallen from their initial lofty prices in the days and weeks following their IPOs.
With Zynga, that cycle simply happened more quickly. Its stock zoomed 15% to $11.50 early in the day, but fell to as low as $9 in late afternoon trading before closing at $9.50 a share.
Max Wolff, chief economist at GreenCrest Capital in New York, attributed Zynga's disappointing first day to broader fatigue over technology IPOs.
"Investors feel burned by this space," Wolff said. "They chased LinkedIn. They chased Angie's List. They chased Groupon. And they got nowhere."
By the time Zynga came to market, money managers and investors had become deeply skeptical of technology companies in general, and social networking companies in particular.
Compounding the issue is a reluctance by mutual fund managers to jeopardize their year-end results with a potentially risky stock, especially when the declining market has exposed cheaper and potentially less risky stocks.
"It's turned from a seller's market for technology stocks into a buyer's market," Wolff said.
Zynga had initially filed its plans with the U.S. Securities and Exchange Commission to sell its shares on the Nasdaq in July, and many had expected the company to debut a couple of months thereafter. As August and September rolled by, some speculated that the tumultuous stock market kept Zynga's IPO at bay.
Zynga's Chief Executiv,e Mark Pincus, said in an interview Friday that the reason for the delay was much more quotidian.
"We chose December because that’s when the SEC cleared us to go public," Pincus said. "We just went public as soon as we were able to."
-- Alex Pham