Stocks in Motion: GSV Capital, Zynga
Closed-end investment fund GSV Capital (NASDAQ: GSVC) traded lower by more than 4% this morning, continuing a decline that has amounted to around 38% since May 16, two days before shares of Facebook hit public markets.
As of this morning, shares of GSVC were trading around 14% below the company's Net Asset Value reported in its May 8 financial report. GSV Capital's investments in public companies Groupon (NASDAQ: GRPN), Zynga (NASDAQ: ZNGA), and Facebook (NASDAQ: FB) have declined drastically since May 18. These investments are three of around 29 listed in the company's website. In a recent interview with Benzinga, GSV Capital's CEO noted that Facebook is only around 4% of overall holdings.
Bulls might think that declines in GSV Capital's publicly traded investments cannot be generalized its other investments in private internet companies. Bears might think instead, that declines in public internet stocks are signs that a bubble is popping that could bring down GSV Capital's entire internet company laden portfolio.
Facebook game maker Zynga (NASDAQ: ZNGA) also traded lower by more than 4% this morning. The company's share price has essentially been in free fall since early March, declining by more than 50%. This decline included an approximate 21% decline since the day of Facebook's initial public offering.
Bulls might expect the company to churn a healthy profit this year and achieve explosive growth that will make the company's current valuation seem reasonable. Bears might point to the company's reliance on Facebook, the source of almost all of Zynga's revenues. They might also think that social gaming is over-hyped, and that competition from other gaming companies will prove current projections of Zynga's growth rates to be overly optimistic.
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