Social media stocks Zynga Inc(NASDAQ:ZNGA)and Zynga Inc(NASDAQ:ZNGA), once the hottest Internet companies, are the worst performing stocks so far this year.
Groupon, which provides daily discount deals, raised about $700 million in an initial public offering last year and was valued at $13 billion.
Today the company’s valuation has dropped to $3.6 billion in terms of market capitalisation. The shares, which were offered to investors at $20 apiece in the IPO, have now dropped to $5.5.
Game developer and close ally of Facebook, Zynga raised $1 billion in its IPO in December last year and was valued at nearly $9 billion. Today that valuation has dropped to $1.8 billion, while the shares are trading at a dismal $2.4.
At the start of 2012 and just after going public, Zynga's chief Executive Officer Mark Pincus had said, "“Our goals were we want to raise a billion dollars. Through going public, we wanted to add some more great long-term investors to the company. All of that was successful.”
Zynga's investors would like to differ with that strongly. So far as they are concerned what the company has done is take their money and made them poorer for it.
Groupon and Zynga shares have depreciated by three-fourths since their debut. According to Forbes, their shares are now the worst performing among U.S. companies with market capitalisation of more than $1 billion.
There are just a couple of more months to go before the year ends and it does not look as if these two stocks are going to recoup their losses in hurry. In fact their claim to fame would be that 2012 will be remembered as the year when stocks of social media companies went bust.