7 Tech IPOs That Investors 'Unfriended'
Facebook. Goddamn, Facebook.
For the past week, it has been impossible to search for the word "IPO" in Google and not be inundated with stories on the social network’s debut on the stock market. However, over the course of the week, there has been a visible shift in the tone of the stories. From wondering whether Facebook’s IPO would open the floodgates for other social media companies, analysts are now left wondering why the Facebook IPO flopped and failed to provide the so called post-listing "pop."
While it's still really early to gauge if this social networking fairytale will change into a grotesque Lovecraftian story, one thing is clear -- Facebook is not alone in the clubhouse when it comes to big names that underperformed during the early stages of their going public. Here are seven other notable members of that club from the not so distant past:
Groupon is the prime example of how an Internet darling can suffer a quick, steep fall from its pedestal. The deal website quickly caught the interest of consumers by offering deals on everything from pizzas to travel getaways to household items. However, the road it took to its IPO was very rocky and included an investigation from the US Securities and Exchange Commission and top management leaving the company. After abruptly canceling its IPO in September of 2011, Groupon finally went public in November of the same year with a share price of $20.
Initially, the shares continued to be traded above that amount, reaching a peak of $31.14. However, in less than twenty days since its listing, the shares were being traded at almost $4 less than the launch price or about $16 per share.
Groupon has never managed to gain footing since then and at the time of writing, its shares were being traded at less than $12.
In spite of being responsible for the most popular games on the planet (Words With Friends, Farmville, etc), Zynga is not a company that's liked universally. Many blame it for forcing players to pay real money to get benefits in-game and others accuse it of plagiarizing content for most of its games. However, none of that mattered when Zynga announced its intentions of raising $1 billion by going public in December 2011 at a price of $10 per share. The stock received much attention and investors hoped to make a killing.
However, in a debut that would make Paris Hilton's film debut look successful, Zynga shares failed to take flight and fell below the $10 IPO price on the day of listing. Although the share value did manage to claw its way back up to a peak of $14.69 in March of this year, Facebook's debacle in the market has pulled Zynga shares down to an all time of low of just below $7.
For the uninitiated, Vonage is one of the largest players in the VoIP industry. In May of 2006, Vonage went public with a share price of $17 raising about $530 million. What made Vonage's IPO unique was that it approached its customers to be the initial investors and offered to sell them the company's shares. Many of Vonage’s customers accepted and sent in their orders for the company's shares.
Since you've gotten this far in the article, you know the story will not take a turn towards sunshine and daisies. Vonage's shares took a beating on the very first day and dropped almost 13% below the offer price. The share price has almost continuously slid since then and is now resting at $1.70, a drop of 90% in six years.
The Vonage customers that had opted to buy the stock did not get their shares issued immediately and only received them after much of its value had been wiped out by the stock market.
They sued, of course.