Why Zynga and Renren Dropped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of social gamer Zynga (NAS: ZNGA) and Chinese social networker Renren (NAS: RENN) dropped by as much as 14% and 15%, respectively, as top dog social networker Facebook (NAS: FB) saw its public debut today.
So what: Both companies are undoubtedly linked to the booming social-media sector, for better or for worse. Zynga and Facebook have been like two peas in a social pod for years, and Renren has long been casually billed as the "Facebook of China."
Now what: Public investors have been waiting for years to buy Facebook and have thus been only able to get their hands on related companies as proxies for the dominant social networker. Now that Facebook is publicly available, investors are likely to be rotating those dollars into the real deal. For now, Zynga continues to build out its own platform and will probably begin moving away from its reliance on Facebook, while Renren is safe from competition for now, as Facebook is restricted in China.
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At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.