Social Media Stocks Continue to StruggleBy: WebProNews Staff - June 1, 2012
Social media stocks are continuing to have a hard time this week following the widely-chronicled Facebook IPO fiasco. Since Facebook, which is currently down 24% from its initial price tag of $38 a share, has struggled in the market since day one, many investors are starting to pull away from other social media-related businesses. For example, Zynga, a company that makes games Facebook users can play on the site, is down 39% from it’s December IPO price. RenRen, which is one of China’s most popular social networking websites, isn’t doing much better; the company is currently down 67% from it’s March 2011 debut.
Social networking companies aren’t the only ones trying to keep their heads afloat in the market right now. Pandora, one of the web’s most popular music services, is down 34% from its IPO price. Coupon-peddling website Groupon, meanwhile, is having some troubles of its own. Although the company is still trucking right along, their stocks are down 41%.
“After Facebook, investors will be gun-shy about dealing with these stocks,” Singular Research’s Robert Maltbie explained. “People will think of the business model, not the buzz.”
Investors aren’t the only ones concerned about the future of Facebook. According to BrandKeys’ Customer Loyalty Engagement Index, the company recently tumbled to the 5th position, right behind LinkedIn, Pinterest, Twitter, and YouTube. The areas where Facebook took the biggest hit: “Self-Image” and “Trust & Security.”
Of course, not all social media networks are having problems. LinkedIn, a site used by business and technology professionals, is 59% this year, effectively doubling its IPO price in the process.