January 30, 2012, 2:56 PM — On January 9, shares of Zynga (NASDAQ: ZNGA) hit 7.97, their lowest price since the social games maker went public last December 16 at $10 a share.
Now, thanks to a "Facebook bounce," Zynga shares are above the offer price for the first time since the IPO nearly six weeks ago.
Zynga climbed above $10 a share on Friday, the day the news broke that Facebook would file to go public, perhaps as soon as this Wednesday, finishing at 10.05.
And shares kept climbing Monday, reaching as high as 10.34 before settling back to 10.32.
Obviously this isn't going to last, as the catalyst is Facebook's pending IPO. Once the S-1 is filed, we're looking at three months of quiet period at least.
Will there be anything in Facebook's filing that could move Zynga shares? There's certainly a chance. Zynga derives more than 96% of its revenue from the social networking giant. Indications in Facebook's S-1 of problems between the companies or metrics that portray Zynga in a negative light could hurt the stock. Conversely, I can't imagine there'd be much in Facebook's S-1 that would help Zynga.
Either way, we could know by as early as Wednesday.
What else in the near future could impact Zynga's stock? Quarterly earnings. Zynga will release its fourth-quarter and 2011 annual results after the market closes on February 14.
So if you're one of the shareholders who bought Zynga on the first day of trading at $10 or more (the stock went to 11.50 in the ticker debut), and you've been underwater ever since, now may be your best opportunity to sell at roughly break-even.
Unless you're confident that Zynga's Q4 earnings will be so impressive that they'll drive shares up. But that probably would require the company prove it's broadening its revenue base beyond 1) Facebook 2) a small number of games and 3) a very small percentage of users who waste their parents' real currency on Zynga's virtual currency.
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