In the first hour or so of trading, internet video game maker Zynga (ZNGA) has not done much. It's IPO price is $10 and as I type this, that's exactly where it trades. Those who were quick to dump their IPO shares in the opening minutes were able to get a 10%ish type of gain, but not much later the stock actually broke its IPO price. Most of the other 'internet/social media' related darlings put out much smaller shares into the float first day to help
manipulate support the price. The other issue for Zynga is most other of the new age companies don't have comparables in public markets (or anywhere) …. hence valuation is of a vague framework – whereas ZNGA at its heart is not much different than Electronic Arts (ERTS) or Activision (ATVI), it simply has been delivered on a different platform with majority of revenue coming via purchases WITHIN the video game, rather than purchases OF the video game.
But no worries, 30 days from now ALL the underwriters will be shouting from the hilltops what a wonderful time it is to buy the stock – as they do with all their IPOs.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog