Social gaming company Zynga saw its share price drop by 5% on its opening day of public trading, although the IPO has valued the business at around $9 billion.
Having priced its shares at an initial $10, the Farmville game maker experienced a 10% surge on the Nasdaq on Friday, before dropping back to $9.50.
Although the float is the largest by an internet company since Google in 2004, investors were surprised by the relatively poor debut performance of shares.
Zynga doubled sales to $829 million in the first nine months of 2011, with its profitable position triggering high expectations for its IPO.
The listing has been a long time coming for the social gaming giant, whose chief executive Mark Pincus reportedly delayed a move to go public due to market volatility.
The company hopes to sell 100 million shares, raising $US1 billion, according to Bloomberg.
If the IPO is successful, Pincus stands to become significantly wealthy. Although he’s not selling any of his own personal shares, he could be worth more than $US770 million.
Some of the other biggest winners include former EA chief creative officer William Gordon, with 61 million shares, along with LinkedIn co-founder Reid Hoffman, with 3.1 million shares.
Importantly, Zynga is one of the few tech companies listing at the moment that is actually turning a profit. Net income was $US12.5 million in the third quarter.
Despite the rush of tech stocks over the past year, there are risks.
Although Groupon, LinkedIn and Pandora have all listed in the past year, these have been relatively minor, and analysts have so far been disappointed with their performances.
LinkedIn debuted on the New York Stock Exchange in May, and has since fallen 29% against a 7.34% drop in the Dow Jones Industrial Average.
Pandora debuted a month later, but has since fallen 39% against a 0.24% drop, while Groupon has fallen 11.59% since early November against a 5.4% drop in the NASDAQ.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.