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.