Zynga follows Groupon, Pandora and LinkedIn in Biggest IPO Boom Year

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From Groupon to Pandora to LinkedIn, see this year’s biggest tech IPOs—and its biggest flops, and look ahead at what’s to come.

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Zynga

Zynga, Inc.—the purveyor of Farmville, Mafia Wars, and other popular addictions on Facebook—headlines the biggest week in U.S. initial public offerings in nine months. Zynga seeks to raise roughly $1 billion on its sale of 100 million shares in an IPO slated for Friday. Yet 2011, the biggest boom year for IPOs since 2000, has already seen several tech companies both sink and soar in their first days on the stock market. Though Zynga is expected to see a big first-day pop, investors might be wise to follow the path of other rising stars that fell flat after going public.

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Groupon

Expectations were high for the deals site, but after raising $700 million in its initial public offering—at that point, the biggest web IPO since Google—Groupon’s value started to tank. In less than three weeks, Groupon shares dipped 19 percent—and a week after that, they fell even further, closing down 42 percent from the IPO to $15.24. Even amid a wavering market, Groupon’s fall was particularly hard and frighteningly fast.

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Linkedin

LinkedIn set a high bar for Groupon and other tech companies—and for Facebook, when it finally goes public—with its stock market debut in May. Insiders were able to buy shares of LinkedIn at a $45 a piece, but the stock was already trading at $83 a share at its debut.  In its first couple of hours of trading, LinkedIn topped $120 a share and closed at $94.25 for the day. That made it the biggest Internet IPO since Google in 2004, until Groupon went public in November. But: LinkedIn stocks have taken a big hit; shares were valued at $67.50 each on December 13, 2011.

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Pandora

When Pandora Media Inc. went public in June, the Internet radio company surprised many with its strong showing. Shares were expected to trade on a price of between $7 and $9 a share, but Pandora ended up raising $235 million through the sale of 15 million shares at $16 each. Pandora reached a market value of about $2.8 billion, but is now worth around 1.7 billion with its stock currently priced at about $10.60 per share.

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Jive

Jive might not be as well known as Pandora or LinkedIn, but the company that produces social-networking software for businesses saw a 38 percent increase in share price during its first day of trading on the market. The backers of Jive initially projected they would sell 12 million shares at $8 to $10 each, but demand was so great it debuted at $12 a share and hit $16.50 early on its opening day. Jive’s market high has hardly wavered, unlike that of its peers.

Homeaway

In a market that encourages people to rent just about everything to make extra cash, Homeaway seems to be making e a killing. The vacation-home rental service raised $216 million in its initial public offering and reached a $3.41 billion valuation at the end of its opening day—with shares hitting $42.77 each. Unfortunately for Homeaway investors, the rental company’s stock is less popular than renting vacation homes. After a successful IPO, the site’s stocks were valued at $23.77 on December 13, 2011.

Bankrate

Bankrate’s stock-market debut got off to a rocky start. Shares dipped below the personal-finance site’s IPO price of $15. By day’s end, though, the Florida-based site, which collects data about retirement savings, banking fees, mortgages, and car loans that it then publishes online, saw its shares close at $15.34 each. Since going public, Bankrate has actually seen its stock rise—it is priced at almost $19 a share on December 13, 2011.

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Yelp

There are still more IPOs to look for as 2011 comes to an end. Among them: Yelp, the local recommendation site that has booked $59 million in net revenue in the first nine months of this year, which filed to go public in November. The company seeks to raise $100 million, but the big question is whether Yelp will reach its desired valuation of between $1 billion and $2 billion. Its revenues continue to grow, but the site, which boasts 22 million reviews, is still not profitable.

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Facebook

Last, but hardly least, is perhaps the most highly anticipated IPO in years: Facebook. The rumor mill has the social network filing an IPO before the end of 2011 that will raise a whopping $10 billion. If true, that would be a record (Infineon Technologies AG holds the record at $5.2 billion in 1999) and also give Facebook a paper value topping $100 billion.