NEW YORK, NY -- (Marketwire) -- 05/31/12 -- Social media stocks have fallen sharply recently. The Global X Social Media ETF (SOCL) is down almost 14 percent in the last month. There are currently a total of four social media companies (Facebook, Groupon, Zynga, and Pandora) who have went public in the last year that are trading below their initial IPO price. Five Star Equities examines the outlook for social media stocks and provides equity research on Zynga Inc. (NASDAQ: ZNGA) and Groupon Inc. (NASDAQ: GRPN).
Facebook options began trading Tuesday on the New York Stock Exchange, and will make its debut on the BATS Options Exchange Wednesday. According to an article from the Dow Jones Newswires roughly 365,000 Facebook options had been traded Tuesday, giving the right to buy or sell 36.5 million shares of the stock. "When you see a lot of people buying puts, that may put downward pressure on the stock because of the hedging that market makers have to do," said Brian Overby, TradeKing senior options analyst. Facebook after Tuesday trading was worth $79 billion, down from its IPO valuation of $104.1 billion.
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Shares of Zynga, who accounted for 15 percent of Facebook's revenues in the first quarter, fell nearly 8 percent on more than double the average volume Tuesday. The company closed at $6.09, almost 40 percent below their IPO price of $10. The social gaming company's lock up agreement ended on May 28, 2012.
Groupon is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount. Groupon's lock up period ends on June 1, and will free up more than 600 million shares on the public market. The company priced its IPO back in November at $20 per share, the company closed at $11.79 Tuesday.
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