Market Overview

Here's How Much Investing $100 In The 2011 Zynga IPO Would Be Worth Today

Here's How Much Investing $100 In The 2011 Zynga IPO Would Be Worth Today

Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500's (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.

Zynga’s Difficult Decade

One market laggard of the last decade was mobile and social game developer Zynga Inc (NASDAQ: ZNGA), which is set to report first-quarter results Wednesday.

Zyngachat was founded in 2007 and made the move to go public in December 2011. Zynga was a relatively high-profile IPO of the 2010s, hitting the market with a $7-billion valuation.

Unfortunately, investors expecting Zynga to ride the wave of social media and global smartphone penetration have been sorely disappointed. Despite skyrocketing mobile and social media usage, Zynga laid off about 18% of its employees in mid-2013, less than two years after its IPO.

The move came after the company had reportedly lost nearly half its user base over the previous 12 months. The company followed up with a second round of layoffs in 2014, reducing its payroll by another 15%.

After selling IPO shares at $10, Zynga shares hit their all-time high within six months, soaring up to $15.91 in early 2012 during the frenzy following its IPO. By late 2012, Zynga had dropped back below its $10 IPO price and would never get back to that level again.

Zynga shares continued to tumble on fears surrounding shifting gaming trends and falling user numbers. Zynga stock hit its all-time low of $1.78 by early 2016.

Zinga In 2020 And Beyond

Zynga’s turnaround efforts in recent years drove the stock as high as $7.85 in early 2020.

While other stocks were hit hard by COVID-19 shutdowns, Zynga was one of only a handful of companies that could potentially benefit from a shelter-in-place environment.

Still, $100 worth of Zynga IPO stock in 2011 would only be worth about $74 today.

Looking ahead, analysts are optimistic Zynga can maintain its recent momentum in 2020. The average price target among the 21 analysts covering the stock is $8, suggesting 8% upside from current levels.

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