FarmVille's Owner Is Shriveling With the Tech Bubble
Zynga was supposed to help launch the market into another tech-stock boom. It has impressive revenue and, ostensibly, a history of profits. And that's why everyone's nervously talking today about how the videogame company's brand new stock is melting: The tech bubble is turning to bust.
Zynga shares are trading around $9 at the moment, off from last week's IPO price of $10 and Friday's close of $9.50. The FarmVille and Mafia Wars creator rakes in somewhere in the neighborhood of $1 billion in annual revenue by selling ads and virtual goods inside its collection of Facebook games. Trouble is, Zynga's been spending a lot of that money to keep up with the fickle casual gaming market; its profits may have vanished in 2010.
Zynga's decline follows a host of other disappointing IPOs, including the initial offering by Groupon, whose stock rose, fell below its $20 offering price, and has recovered, barely, to $22. Shares in non-financially-awesome online music service Pandora collapsed to $10 after a $16 initial offering. Demand Media's shares have gone from to $7 from $17. Overall, new stocks are down 23 percent so far this year, according to Renaissance Capital. So the tech bubble really has popped. Although we expect some private tech investors will keep trying to add back oxygen for a while longer, so entrepreneurs without ideas should keep trolling for one of those insanely generous Jakob Lodwick deals!