This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Zynga Pops Then Drops in IPO Debut (Update2)

Zynga story updated with closing share price.

NEW YORK (TheStreet) --Zynga (ZNGA) shares popped 10% to open at $11 Friday as the gaming company made its public debut on the Nasdaq but demand didn't hold up and the stock closed at $9.50.

Shares of the FarmVille maker traded as low as $9 in early afternoon trading before staging a partial recovery. Zynga raised $1 billion in the IPO, making the stock offering the largest since Google's (GOOG) in 2004, and valuing the company at $7 billion.

Zynga's relatively weak performance comes on the heels of hot offerings from other Internet companies.

LinkedIn (LNKD) shares more than doubled in their market debut in June, while Pandora (P) surged 63% during its first day of trading .

This week, shares of Jive Software (JIVE), which makes Facebook-like social networks for businesses, shot up 27% during its IPO.

But many of these companies saw shares drop following their IPO debuts. LinkedIn is down 31% this year while Pandora has fallen 40%.

"Perhaps investors may be a little more way of tech stocks in general having seen the slumps that others have endured over the past few months," said Lee Simmons, an industry specialist with Dun & Bradstreet. "That might be what's steering Zynga's IPO today."

Zynga also offered up more shares of its common stock -- 14% -- than other Internet companies like Groupon (GRPN), LinkedIn and Pandora who came to market with floats of less than 10%. These companies used smaller floats to push demand for shares higher which initially inflated their stock price.

Zynga on Thursday priced at the top of its expected range of between $8.50 and $10 a share, though analysts were mixed about the company's performance in the public markets.

Hudson Square analyst Daniel Ernst remains "positive on the offering" and believes its valuation is reasonable.

Sterne Agee analyst Arvind Bhatia, meanwhile, has already initiated coverage of the company with an underperform rating and said the company's valuation is "not justified."

Zynga's valuation is more than that of video game competitor Electronic Arts (ERTS) with a $6.8 billion market cap but less than Activision (ATVI) with a $13.6 billion market cap.

Last year, Zynga generated a profit of $90.6 million on revenue of $597 million. The company makes money from the sale of virtual goods, such as chickens or cows for its FarmVille game.

The company makes four of the five most popular games played on Facebook and forks over 30% of its revenue to the social networking giant. 90% of Zynga's revenue comes from the Facebook platform, though the company is pushing aggressively into mobile to diversify its business.

Zynga is going public during a volatile time for IPOs. Last week, five companies withdrew or postponed their offerings, according to Renaissance Securities.

"The market is overwhelmed with unknowns and there's a tremendous amount of fear regarding every industry, especially new companies," said Jeff Sica, president of SICA Wealth Management. "The market is losing confidence and its not going to focus on a good story or a long term prospect."

--Written by Olivia Oran in New York.



>To follow the writer on Twitter, go to http://twitter.com/Ozoran.

>To submit a news tip, send an email to: tips@thestreet.com.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,086.63 -26.91 -0.16%
S&P 500 1,987.01 +3.48 0.18%
NASDAQ 4,473.6970 +17.6810 0.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs