On Thursday — the first day of trading after Facebook filed for its IPO — investors went into overdrive. Here’s a look at the gains in social stocks yesterday:
| Company | Ticker | Price | Gain |
| Zynga | ZNGA | $12.39 | +17% |
| Groupon | GRPN | $23.08 | +7% |
| LNKD | $76.98 | +6% | |
| Pandora | P | $13.32 | +3% |
It’s a good bet that some of the moves came from short covering. This means short sellers — who are betting on a stock price to fall — were closing out their positions, which involves buying back stock. It adds even more fuel.
At the same time, the Facebook filing shows how the company is certainly the uber player in the space. Take a look at the recent financials (these are annual figures as of the third quarter of 2011):
| Company | Revenues | Profits (loss) |
| $3.3B | $951M | |
| Zynga | $1B | $74M |
| $436M | $10M | |
| Pandora | $241M | ($15M) |
| Groupon | $1.3B | ($528M) |
However, Facebook’s S-1 might have provided investors with some insights on Zynga’s upcoming fourth-quarter numbers. Based on the analysis of Baird Equity Research’s Colin Sebastian, it looks like the gaming company will have a strong report. He thinks Facebook’s 20% increase in payment revenue should mean a nice boost for Zynga.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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