Why Did Zynga Tank After Facebook IPOed?
theatlantic.com
Why Did Zynga Tank After Facebook IPOed?
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Re: Why Did Zynga Tank After Facebook IPOed?
#2[deleted]
Re: Why Did Zynga Tank After Facebook IPOed?
#3Interesting. I wonder what effect trading on Second Market had on FB's IPO. It could well be that people were gobbling up FB stock in expectation of the IPO pop. When that fizzled, they may well have dumped that stock, leading to the later depressed pricing.
Now, this is all contingent upon how much stock was being moved on SM, and the blackout period I suspect was in place preventing its trading. Still, I'd be interested in an analysis of SM's impact.
Re: Why Did Zynga Tank After Facebook IPOed?
#4I don't think anyone in the startup/tech world believes in Zynga's ability to be a (public) company that can seriously grow revenues and create sustainable products.
Re: Why Did Zynga Tank After Facebook IPOed?
#5There is another possibility and that is dealers were desperately trying to maintain facebooks price above the Ipo price, especially given the significant lower fees taken on this Ipo and the greenshoe option. Without this dealer intervention it is possible facebooks price would have correlated more with zynga's price short. The greenshoe option http://en.wikipedia.org/wiki/Greenshoe could also have something to do with these trading patterns. Given facebooks stock performance this is not positive for future Internet IPOs.
Re: Why Did Zynga Tank After Facebook IPOed?
#6I don't think anyone in the startup/tech world believes in Zynga's ability to be a (public) company that can seriously grow revenues and create sustainable products.
Can you explain why?
Re: Why Did Zynga Tank After Facebook IPOed?
#7There is another possibility and that is dealers were desperately trying to maintain facebooks price above the Ipo price, especially given the significant lower fees taken on this Ipo and the greenshoe option. Without this dealer intervention it is possible facebooks price would have correlated more with zynga's price short. The greenshoe option http://en.wikipedia.org/wiki/Greenshoe could also have something to do w…
There is another possibility and that is dealers were desperately trying to maintain facebooks price above the Ipo price, especially given the significant lower fees taken on this Ipo and the greenshoe option. Without this dealer intervention it is possible facebooks price would have correlated more with zynga's price short.
um, they said that in the article.
Re: Why Did Zynga Tank After Facebook IPOed?
#8The reason is obvious to me. In fact it is so obvious now that I am kicking myself for not finding a way to make money out of it.
It is related to the reasoning proferred by the Atlantic, but it is not exactly it. It is true that Zynga and facebook are very related. And for that reason, it seems to me that a lot of Zynga shareholders were holding Zynga shares not because they want to own Zynga, but because they want to own Facebook and there was no way to buy Facebook on the public markets until today.
So a lot of Zynga shareholders were merely holding Zynga as a proxy for Facebook. Once Facebook was offered all those people decided to sell Zynga to buy Facebook. And Zynga tanked accordingly.
Now of course you will ask, why did Facebook seem to tank at the same time. If my theory about Zynga was true would that not mean that Facebook should go up as Zynga tanks. Yes, if all other things are equal. But in this case they were not. Facebook went down for a different reason. The reason Facebook went down is the usual immediate post IPO sell-off when a bunch of people that got into the IPO sell their shares immediately to make some quick profit.
So yeah, I wish I had thought about that yesterday.
Re: Why Did Zynga Tank After Facebook IPOed?
#9The reason is obvious to me. In fact it is so obvious now that I am kicking myself for not finding a way to make money out of it. It is related to the reasoning proferred by the Atlantic, but it is not exactly it. It is true that Zynga and facebook are very related. And for that reason, it seems to me that a lot of Zynga shareholders were holding Zynga shares not because they want to own Zynga, but because they want…
To further support my theory, I note that LinkedIn also fell today by 5.6%. This was not a fall as steep as that of Zynga, but of LinkedIn is not as closely intertwined with facebook as Zynga.
Re: Why Did Zynga Tank After Facebook IPOed?
#10The reason is obvious to me. In fact it is so obvious now that I am kicking myself for not finding a way to make money out of it. It is related to the reasoning proferred by the Atlantic, but it is not exactly it. It is true that Zynga and facebook are very related. And for that reason, it seems to me that a lot of Zynga shareholders were holding Zynga shares not because they want to own Zynga, but because they want…
Hindsight bias: