The Facebook IPO and the Future of Online Social Gambling
If you didn’t buy shares of Facebook last Friday, you should be happy. The much hyped IPO didn’t live up to expectations. Facebook’s first day as a public company started off on the wrong foot. Shares became publicly available about a half hour late as the NASDAQ experienced technical difficulties.
That was only the beginning of a long day. Shares of Facebook rose to as high as $45 for a few moments and then went back down to $38.23. For all the noise and hype, Facebook was up 23 cents at the end of trading on Friday.
And then there’s Zynga. Zynga’s shares plummeted on Friday – losing 13.4% of its value. At one point, Zynga was down 23%. Many on Wall Street attribute the drop on Zynga (and Linked-In) shares to investors selling Zynga shares and buying Facebook. Call them the “social networking investors”. Others attribute it to lower traffic. Traffic on Farmville is down 40% from a year ago.
Zynga and other social gaming companies are in the content business, but have been slow in releasing new content. If “Content is King”, then “Old Content is Passé” – and Farmville and much of Zynga’s portfolio is old news to today’s players.
Another week of falling share prices for Zynga as well as a weak first week of trading for Facebook is the worst nightmare for the social gaming industry. Other Wall Street professionals say that the opening day of trading has no connection to future value. Let’s hope so.