Mixed Fortunes for First Social Media IPOs

The rush to social media IPOs slowed quite a bit in recent months: Groupon, once touted as the next big IPO, seems to have put plans on hold in the wake of several less-than-stellar financial statements and revisions to accounting practices that have damaged its credibility, and Facebook -- in a much better position -- doesn't appear eager to go public right away.

Their hesitation is understandable, considering the mixed fortunes of the first wave of social media IPOs. Just take a look at Pandora, which went public back in June but is now currently "underwater." Pandora's stock debuted at $16 per share, and shot up to $26 per share on the first day of trading... but by the second day of trading it had already dipped to $13.26, and at the time of writing (almost four months later) it is trading at $11.84. Not exactly a huge payoff for anyone who held on to the stock after the first day.

The other big social media IPO, LinkedIn, has fared considerably better. After debuting at $45 per share in May, shares of LinkedIn closed at $94.25 on the first day of trading, or about 110% over the IPO price. It continued to climb to $109.97 on July 15, before subsequently settling at $74.29 when this was being written. That's still 65% above the IPO price, and a healthy profit margin for anyone who got in early... but it's also interesting to see how far it has declined from its peak price in July, dropping 32.5% in three months.

I'm no stock market analyst, but all this looks like a fairly volatile market for social media companies, especially as investors grow increasingly leery about the near-term prospects of the stock market in general. Between fickle investors, weak earnings, and a gloomy global economic outlook, maybe it's for the best if Groupon and Facebook decide to sit tight for a while.

1 comment about "Mixed Fortunes for First Social Media IPOs".
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  1. Mark Burrell from Tongal, October 6, 2011 at 2:48 p.m.

    one thing to consider is the fact that going public just isn't worth it.

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