Social Networking Stocks are Being Kicked to the Curb

You got to know when to hold em – know when to fold em

In the world of investments there is usually a direct correlation between the major markets and individual stocks. Certainly when an entire sector moves up or down, those in that sector move up or down as a group. The major markets today were down with the Dow giving up a tad less than 1% and the Nasdaq shedding 1.3%.

The social networking stocks took a harder shot in the chin. Some are pointing to the lackluster performance of Zynga and others are saying that its just investors “dumping network stocks en masse.” Let’s take a closer look at some of the most watched ones in the industry.

Social networkers

• Zynga (ZNGA) – Just went public last Friday at $10 a share. Made a run to $11.50 and that has been all she has wrote. Down another 45 cents per share or 4.7% closing today at $9.05. Settlement day is Wednesday; there may be an attempt to rally these shares. It’s still too early in the trading life of this stock to provide any really educated analysis. Certainly the offering was not very well received
• Groupon (GRPN) – Fell again on Monday, off $1.04, or 4.5%. The shares closed at $22, still 10% above its November IPO price. Today’s move was on relatively light volume, in this case, I’d say there was a lack of buyers verses a lot of selling. Believe it or not, it does make a difference. The shares received a mix review when analysts came out of the quiet period.
• LinkedIn (LNKD) – was off 90 cents, or 1.4%. These shares were trading more in line with the Nasdaq (off 1.3%), to $64.94. Again, very light volume for this stock. Less than half the average daily shares traded hands today. 
• Pandora Media, Incorporated (P) – dropped 56 cents, or 5.3%, to $9.99. Volume spiked to 3 times the daily average. This stock was aggressively sold today.
• HomeAway, incorporated (AWAY) – Gave up $2.42, or 10.4%, to $20.88. Intraday, AWAY hit another all time low by trading at the $19.94 level. Volume was 2 times normal daily volume meaning that sellers had the upper hand.

For those that have nerves of steel you may want to take a look at GSV Capital (GSVC). The San Francisco-based business-development company invests in the biggest names in technology before they go public. Facebook, Twitter and Zynga are among GSV Capital’s impressive roster of 17 investments, all bought when those companies’ IPOs were little more than a rumor. The shares closed down $.80 or 5.7%, to $13.20. Volume was below average on GSVC. I would consider this as close to an overall sector play as there is right now.

While this was a rough day for the social networking sector, in no standards was it an across the board sell off.

 Source: Forbes