Zynga Shares Drop with Facebook IPO
Shares of social gaming giant Zynga fell off a cliff on Friday, mere moments after Facebook stock became available for the first time. Prices of Zynga shares fell so quickly that trading was halted briefly to help stem the losses. By the end of trading, Zynga stock was down 13.5% over the previous day.
What’s Behind the Fluctuations
The excitement ahead of the Facebook initial public offering (IPO) was the big financial story of the year and many observers thought it might benefit social media stocks in general. But that’s not what happened by a long shot.
Zynga wasn’t the only social media stock to get hammered on Facebook’s special day. LinkedIn shares were down 5.6%, while Yelp! shares were down 12%. It’s believed that a large number of investors dumped these companies simply because they only want one social media stock in their portfolio and were going for Facebook’s name brand value.
Want to know more about Zynga’s plans for the future? Check out Zynga CEO Prepping for Legal Poker.
What it Means for Affiliates
Zynga’s big price drop could have an interesting impact on gaming affiliates, especially if the company feels pressured to increase revenues immediately.
It’s been rumored that Zynga is looking to get into the online casino space and this could be the impetus they’re looking for to speed up their plans. After all, any publicly traded company is going to need increased revenues to keep investors happy.
There are only so many people willing to pay for virtual poker chips and farm implements. Real money gambling could give the company a badly needed shot in the arm.
Look at the Big Picture
While speculating on Zynga’s fortunes is an amusing parlor game, the bigger picture is more important than a single day’s trading. Keep an eye on Zynga (and Facebook) in the weeks and months after the hype has gone down. That’s when the real action will take place.
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