In April of this year, a small fraction of the executives and early investors of social gaming company Zynga (ZNGA), through carefully arranged private sale of shares, cashed in over $500 million.
These deals were very timely. Since then, as investors question the long-term prospects of Zynga, and the failure of the Facebook IPO weakened investor confidence in the social networking industry, Zynga stock price has declined by nearly half.
This private sale of shares played as the catalyst for the decline in the Zynga stock price which has led to the dissatisfaction of the employees. Just like most companies in Silicon Valley, Zynga relies on generous stock incentives to attract talents.
Zynga stock price has fallen close to $6 per share, down 40% compared to the Zynga IPO price of $10 in December last year. The former employees and existing staff of Zynga told the reporter of Reuters, as the continuous reduction in the company’s stock price, the morale of the staffs has been declining.
Lou Kerner, the founder of Social Internet Fund, said that working in Zynga is extremely difficult, the reason why employees choose to work here, is hoping that Zynga stock price to rise substaintially. When the performance of the Zynga stock fells short of the expectations, the staff cannot help but be disappointed.
Zynga CEO Mark Pincus said the company’s IPO or as the decline or gain in Zynga stock price, would not have any significant impact on the company’s ability to recruit. He is focusing on developing products, rather than considering whether the market valuation is correct or not.
Last Friday, another recently listed Internet darling Facebook (FB) saw its shares finish at $27.92, down 5.7% from the previous day closing price; Groupon (GRPN) stock price closed at $9.70, down 8.9% from the previous day closing price, only 1 cents higher than the lowest price in history.