Zynga and Groupon Have Struggled Badly Post-IPO

Two recent high profile tech IPOs (initial public offerings), Zynga and Groupon, are getting bruised and battered on a seemingly daily basis.

If you managed to grab some shares of either company in their initial public offering, you are down significantly on your investment.

Zynga, for instance, ended up pricing their IPO at $10. The stock is currently trading at $9.09 and has been on a steady decline over the past month or so.

Groupon, on the other hand, ended up pricing their IPO at $20/share. The stock is currently trading at $11.82.

If you were unfortunate enough to purchase either stock on the open market after they opened for trading (and are still holding), you are taking an even worse beating.

Groupon opened at $28.00 on November 4th, 2011. If you bought at that price and are still holding, your investment is down nearly 60% in less than six months.

Zynga opened at $11.00 on December 16th, 2011. If you bought at that price and are still holding, your investment is down nearly 20% in roughly 5 months.

Both companies have seen a steady progression of negative news releases that have helped to sink their share prices.

Groupon has been dogged by a number of issues, including recently revised quarterly earnings results and worries over competition. Zynga, on the other hand, has been hit over insider sales (in the form of a large secondary offering that saw the company raise no cash) and worries over user growth. Zynga insiders dumped 42,969,153 shares in the recent SPO.

--

Can either company recapture their previous buzz? Are Groupon and Zynga buys now, or are they still overvalued as many people contend?

Filed under: General Market News