Zynga’s probably none too happy about Facebook’s IPO last week. Facebook left its first day of trading at $38.37, a slight increase over $38.
However, Zynga saw some heavy losses as its stock went down to $7.12, down 14 percent from the beginning of the day. The declines happened so quickly that a trading halt was placed, as is customary for stocks that see rapid fluctuations. These halts are usually placed to allow investors to assess the situation of the stock before resuming trading. However, when the halt was lifted, another one was levied because of how quickly the stock continued to tumble.
Colin Sebastian of Robert W. Baird attributes to the drop to the overwhelming volume of Facebook shares that hit the market. "I don't think there's anything fundamental about Zynga that has changed this morning… I think there are some investors that sold some of their Zynga shares just to buy Facebook," Sebastian stated in regards to Zynga’s stock drops.
Zynga’s not alone in its stock woes as other social media sites have taken stock hits too. LinkedIn dropped by six percent, Groupon seven percent, Yelp three percent, and Chinese social networking site Renren Inc., a whopping twenty one percent.