Busted Zynga IPO Weighs Further On Social Media Shares (ZNGA, GRPN, LNKD, SINA, SOCL, GSVC)

Zynga, Inc. (NASDAQ: ZNGA) is an initial public offering in trouble.  Whether you call it a busted IPO, a broken IPO, or something else is up to you, but the sell-off from the start needs to be a lesson to the underwriters and to the investors who buy shares of initial public offerings. 

What was unique about this IPO is that the entire Class A share voting class, the shares which the initial public offering investors were buying last week, appear to have a whopping total of 1.8% of the voting rights after you tally up the B Shares and the C shares into the equation.

The new investors were buying into a public valuation of $7 billion after the company sold $1 billion worth of the common stock.  The social video game company is taking a toll elsewhere.

Groupon, Inc. (NASDAQ: GRPN) is down 2.8% at $22.40 with a post-IPO range of $14.85 to $31.14. LinkedIn Corporation (NYSE: LNKD) is down 0.1% at $65.76 with a post-IPO range of $55.98 to $122.70. Sina Corporation (NASDAQ: SINA) is down almost 4% more at $52.88 against a 52-week range of $46.86 to $147.12 as China regulation on microblogs increases.

Global X Social Media Index ETF (NASDAQ: SOCL) has not traded, signs that “social media” in stock ETFs can be skipped.

GSV Capital Corporation (NASDAQ: GSVC) is trading higher as a beneficiary of owning Twitter shares now that Prince Walid bin Talal of Saudi Arabia has taken a $300 million stake in Twitter.  GSV owns Twitter shares (and Facebook shares) and its shares are up 1.3% at $14.19 on the day.

Zynga shares are trading down another 4.7% at $9.05 after closing at $9.50 on Friday.  Unfortunately, Zynga’s IPO price was $10.00 per share.

JON C. OGG