Zynga stock falters, holds on first day of trading

Zynga stock finally roared out of the gate and on to the trading floor yesterday at $10 a share, but investors weren't hugely impressed with the social gaming company. The stock started up a dollar at $11, and then dropped back down two, and then thirty, and then fifty cents during the day, leveling off at $9.50, which Forbes says was thanks mostly to "a stabilizing bid by Zynga's underwriters," which means Zynga's investors stepped in and bought up enough stock to keep the price up.

So what happened? Shortly put, Zynga's stock wasn't really worth what it was priced out at. An initial public offering is designed to be priced a little low, in order to drum up demand for a company's stock from the public (not to mention raise some money). But Zynga went high and, as a result, didn't quite get the graph it wanted today.

They didn't sell the FarmVille, so to speak -- ZNGA will likely be trading fine on Monday (and $9.50 is fine for the highly competitive gaming industry; THQ is sitting down at 75 cents right now). But Zynga's hype phase appears to be over. Now the company needs to prove it can sell more than just cow clickers.

Reader Comments (20)

So the whole Alec Baldwin stunt didn't work out as planned.

http://www.youtube.com/watch?v=P3ALwKeSEYs

This is the kind of social gaming news I like to hear...

oi joystiq, that was low.
cow clicker is a very sophisticated playing experience...unlike the stuff zynga produces

I believe Blizzard already trademarked the term "Cow Clicker".
http://classic.battle.net/diablo2exp/quests/cow.shtml

"$9.50 is fine for the highly competitive gaming industry; THQ is sitting down at 75 cents"

Correct me if I'm wrong, but doesn't individual share price only matter when considered with the net number of shares? To my knowledge, at their leisure a company can split their stock, doubling the number of shares but halving the worth of an individual share but keeping the net worth the same.

@mbarriault

Yeah, I'm not clear on how stocks work either, and I never cared enough to look, but I assumed that stock was determined by the number of shares and the price per share. THQ could have many more shares than Zynga and value each individual share less.

I certainly didn't expect people to jump on the Zynga share wagon. The company is very successful right now, but as with many trends these days, they could easily slip and drop everything.

@mbarriault

At a basic point of view yes. A company with 2 shares at $5 will be "worth the same" as a company with 1 share at $10.

@mbarriault

You are correct. High share prices look impressive to an uneducated public, but you really have to look at a companies enterprise value to see what a company is "worth."

I also wonder if ZNGA is paying dividends or not. If a company doesn't pay dividends to its shareholders, the only way to make money off of the stock is to sell it. Apple vs. Microsoft is a great example of this: Apple has a higher enterprise value and stock price, but doesn't pay any dividends, whereas MS will pay you dividends even if they had a bad year..

Imagine if they had gone public a year ago? The IPO offering would have been an enormous, front-page event, and people would have snatched it up like they were buying cheap stock in Facebook itself. Demand would have been huge. I think they waited a bit too long for this. If you have booming properties like Farmville, Cityville, Mafia Wars, and they all seem to be at the height of their popularity, isn't that the time? Then again, they have 15 studios around the world, most of which have been acquired in the last year, so maybe they're still growing more than we think? Or maybe they've just expanded too quickly.

Good.

It's somewhat unsettling as a gamer and an aspiring game developer when games that lack, you know, gameplay such as Farmville are getting all of this attention. A lot of their games are just "cow clickers." To some extent, I suppose it's also worrisome players are willing to throw in a few dollars to get random digital goods. If you thought console DLC quality and prices were bad, you should look at what you get when you pay Zynga!

If they have some creative ideas, then that's good for the industry and gamers, and we should wish them success.. If they're just going to make the same old Facebook games and cow clickers, this is just horrendous and you better hope they go come crashing down soon.

@AGuyOnTheInternet
I agree. Talk about a vastly inflated stock valuation. Their digital goods are outrageously priced. Zynga makes EA look good.

I don't know why people are so bent out of shape over this company and their games. There's room for everyone at the table.

@zOMGREI

Are you stupid? There was no industry in the 70s. Might you be talking about 1983?

@zOMGREI If that makes you sleep better at night, then believe what you will. I highly doubt someone playing Words with Friends is going to crash a huge, multimillion dollar industry.

Like I said, social games have their place at the table with major console/handheld games. I enjoy a good game of Words With Friends as much as I enjoy a good game of Portal, Madden, Zelda or whatever other AAA title you can name (with the exception FPS). If the industry is going to crash, its under the weight of its own making.

Saaad trombooone...

At one point, some were valuing Zynga as being worth more than EA or Activision which is just crazy. Had Zynga priced itself lower, I think it would ended the day up, but instead they aimed too high, and the market responded.

Who would have thought there is not a lot of money in virtual farms...

ST

Good. I hope this company rots and dies and then starts smelling really bad like a rotten egg.

As all the unhappy employees try to cash out on their options...

The FAA thinks someone playing words with friends could crash a huge multi million dollar airplane.

Zynga stock falters, holds on first day of trading

Reader Comments (20)

Posted: Dec 17th 2011 7:03AM Gadget Addict said

Posted: Dec 17th 2011 7:05AM Osmium said

Posted: Dec 17th 2011 7:30AM (Unverified) said

Posted: Dec 17th 2011 3:10PM Solar Jetman said

Posted: Dec 17th 2011 8:10AM mbarriault said

Posted: Dec 17th 2011 8:57AM Lerkero said

Posted: Dec 17th 2011 9:05AM This Little Man Says His Name Is said

Posted: Dec 17th 2011 11:26AM R Planteer said

Posted: Dec 17th 2011 10:54AM GMaster7 said

Posted: Dec 17th 2011 11:40AM AGuyOnTheInternet said

Posted: Dec 17th 2011 1:40PM wshwe said

Posted: Dec 17th 2011 1:25PM (Unverified) said

Posted: Dec 18th 2011 10:45PM DnScott said

Posted: Dec 18th 2011 11:40PM (Unverified) said

Posted: Dec 17th 2011 3:44PM 343 Guilty Fart said

Posted: Dec 17th 2011 7:09PM Starcade said

Posted: Dec 17th 2011 9:10PM Steel Toad said

Posted: Dec 17th 2011 9:39PM gregarine said

Posted: Dec 18th 2011 2:48AM StClair said

Posted: Dec 19th 2011 6:43AM CDF12345 said

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