“In Wall Street parlance, this is called a busted deal,” David Smith, chief investment officer at Rockland Trust Investment Management Group, told BizSm@art. “It didn’t work. It didn’t do a good job stimulating demand.”
Zynga, whose popular games include Farmville, Mafia Wars and Words With Friends, first gained traction on popular social-networking site Facebook, where the company makes money by selling virtual items such as jewelry and poker chips in its games. With that being said, Zynga’s IPO had been highly anticipated because it was seen as a way for investors to get a slice of Facebook’s growth before Facebook’s itself goes public (a move expected to happen sometime in 2012).
“In four years, Zynga has grown from nothing into a company that now has 2,000 employees and produces exceptional work,” Jeffrey Katzenberg, head of DreamWorks Animation SKG Inc., told the LA Times. “It’s become one of the greatest gaming companies in the world.”
According to Zynga’s filing with the Securities and Exchange Commission, the company offered 100 million shares, to raise $1 billion to develop games and possibly acquire companies or technologies.
Despite the game maker’s debut-day drop, Zynga CEO Mark Pincus said in an interview that he was unfazed by the stock’s initial performance.
“The value of what we are will be measured in terms of quarters and years, not in terms of trading days,” Pincus said. “What really matters is that over the next eight, 12 quarters, we build products that deliver on the promise of social gaming.”
What are your thoughts of Zynga’s D-Day drop? Do you think Zynga’s IPO woes are a foreshadowing for Facebook’s stock debut?