The trading debut of Facebook didn't exactly burst out of the gate like many people expected. But while the company was getting pounded in mid-day trading Monday, shares of "tracking" stocks -- companies people invested in to own a piece of Facebook before it went public -- have suffered terribly in its wake.
None more so than fellow social giant Zynga.
Zynga shares closed down 14 percent Friday, briefly touching an all-time low. And Monday didn't start off much better. Zynga was down another 6.5 percent in early trading, hitting yet another all-time low of $6.40 per share, though they had rebounded to nearly even territory by the end of trading as bargain hunters stepped in.
The good news for Zynga is that while there is some emotional selling going on by investors, the company is still sound financially.
"I don't think there's anything fundamental about Zynga that has changed," says Colin Sebastian of Robert W. Baird. "I think there are some investors that sold some of their Zynga shares just to buy Facebook."
In its first quarter, Zynga reported revenue of $321 million and has a war chest of $150 billion in cash. Scoff all you want at the company's games, but that's a decent foundation.
That was small consolation on Friday, though.
The problems started early. Zynga shares began their steep decline in the moments before Facebook began trading, prompting a trading halt at 11:37am — a standard Nasdaq procedure for any stock that moves 10 percent or more in a five-minute period. That "time out" move typically lasts no more than five minutes (to give investors time to gather their wits). Zynga shares were halted for nearly an hour over the course of the two curbs, though.
Put in gaming terms: Nasdaq had an Error 37.
The troubles arose from Nasdaq being unable to handle the volume of demand for Facebook shares. 567 million shares of the company traded hands on Friday.
Even if Zynga manages to rebound a bit by the end of the week, it's likely to be little consolation for founder Mark Pincus. His losses on Friday (on paper, since he wasn't selling stock) added up to nearly $130 million. On the other hand, he more than made that back with the 5.3 million shares of Facebook shares he owns — 1 million of which he sold Friday.