Shares of Zynga Inc., the leading maker of social games on Facebook, tumbled 4 percent on Wall Street in the first hour of trading today, signaling what appears to be fading interest in the once-hot social media sector among investors.
Friday's stock market debut of Zynga, the company behind FarmVille and other popular games, marked the end of a string of social media IPOs that met with mixed success in 2011. Zynga went public at $10 a share on Friday; its newly public shares were down nearly 9 percent from the IPO price this morning. The initial performance of this hotly anticipated stock offering has been a disappointment to social media investors, especially since the broader American stock market was up this morning.
Zynga's failure to attract broad buying interest might be seen as a sign that the wind has shifted for social media stocks, which appear to be falling out of favor with buyers of all stripes as outlined in this article on social media investment performance in 2011. Investors are closely watching the many social media IPOs of 2011 to see what clues they might hold for the hotly awaited stock debuts of Facebook and Twitter in 2012.