IP Uh Oh

2011 in Social Media IPOs: The Winners, The Losers, and The Winningest Losers

groupon cat 360 2011 in Social Media IPOs: The Winners, The Losers, and The Winningest Losers

Groupon Cat, feral as ever.

In 2011, Wall Street caught friending fever. It was a hell of a year for social media IPOs, as investment banks welcomed themselves into the money-hungry arms of Computer Nerds, Many Of Whom Should Have But Didn’t Know Better. Of course, there were a few winners that weren’t said banks, as well as a few you’ve never heard of. In 2012, Facebook will lead one of the largest tech IPOs pretty much ever, and the largest year of tech IPOs since 1999. What did we learn? Mostly, that for every bet, there’s a sucker who’s as desperate for money as most people apparently are for friends. So:

 

Who won, who lost, and who debuted on the market without anyone really knowing?

Mashable put together a great list, but they ranked it by the size of the IPO itself. The largest? Russian search engine Yandex, at $1.3B. But to switch their list up, we’ve ranked said tech IPOs by their gains and losses from their original IPO pricing—the cost per share as they were each set to debut on public markets—along with their position in size on Mashable’s list:

1. LinkedIn (LNKD) +37.2% (5/19)
2. Bankrate (RATE) +36.5% (6/19)
3. Jive Software (JIVE) +27.9% (12/19)
4. Angie’s List (ANGI) +26% (15/19)
5. Qihoo 360 Technology (QIHU) +17.9% (10/19)
6. Zillow (Z) +15.2% (17/19)
7. Groupon (GRPN) +13.1% (4/19)
8. Carbonite (CARB) +11.2% (18/19)
9. FriendFinder (FFN) +0.7% (19/19)
10. Zynga (ZNGA) -5% (2/19)
11. HomeAway (AWAY) -14.8% (8/19)
12. Yandex (YNDX) -20.8% from its IPO Price (1/19)
13. Pandora Media (P) -37.4% (7/19)
14. 21Vianet Group (VNET) -39.7% (9/19)
15. Jiayuan.com International (DATE) -45.6% (16/19)
16. Phoenix New Media (FENG) -51.9% (14/19)
17. Demand Media (DMD) -59.8% (13/19)
18. Tudou Holdings (TUDO) -63.6% (11/19)
19. Renren (RENN) -76.4% (3/19)

We plugged the top and bottom four into Google Finance:

 

ipo chart e1325190058410 2011 in Social Media IPOs: The Winners, The Losers, and The Winningest Losers

You’ll note that as of today, only two of the top four best IPO debuts are still trading above their initial gains. Even more interesting, these are arguably the three most high-profile social media IPOs of the year:

 

zynga chart 2 2011 in Social Media IPOs: The Winners, The Losers, and The Winningest Losers

Two (Zynga, priced at $10, and Groupon, priced at $20) are largely considered failures on the market.

One (LinkedIn, priced at $45) held above their initial post-IPO selling point better than anyone else.

Now, which one do you want to put your money into? If you answered anything but “Zynga,” you’re wrong.

Remember what your parents (should’ve) taught you: There’s no such thing as Getting Rich Quick (without some element of crime involved). The only winners who really made money off of LinkedIn dumped it as soon as they purchased it, or in May, when it peaked. They were not uber-savvy consumer investors like you and I who could call the highest point of a social media IPO like buffalo scouts who can put their ear to the ground and know what the heard is eating that day. No. They were psychotic day traders and people with access to proprietary trading software and people with the cynicism to know better. Anybody looking for a long-term investment who didn’t get in on Day 1 and sold at That Perfect Time got generally screwed, at their own hands, mind you!

Those who listened to the press about Zynga—they have a psychotically productive work culture and the way they’re intertwined to social networks like Facebook in the same way their investment bank underwriters are with the fate of global finance (a sure path to monetary success)—have held on, and are so far being (however slowly) reminded why they invested in the first place if they weren’t on the Social Media IPO Euphoria Bandwagon. Their fate has yet to be fully written—things could still go really bad, like a tray full of vowels in the hands of even the best Words With Friends player—but it’s also the most promising of the three.

The lessons from 2011 in Social Media IPOs are clear:

1. Don’t buy on Day 1.
2. Don’t believe the hype. Ever.
3. If you’re a human being who doesn’t invest with a monolithic institution, you will never show up to this gunfight with anything more than a knife.
4. If you have a social media company, chances are your IPO will not go extraordinary well. Consider this before going public.

fkamer@observer.com | @weareyourfek

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Comments

  1. I would like to comment about open table new issues are almost always bad investments the vast majority of these stocks are way over priced on purpose. I always recommend that investors stay away from these stocks. All of these social networking stocks will come back down to earth one day