One question for today's Facebook Flurry: What would be the effect of the company's IPO on its fellow social networks? Would Facebook's public status raise the fortunes of social networks as a collective group, as it seemed to be doing earlier this week? Or would its public offering suck up investors' attention and money?
Now, we have our (temporary, tentative) answer. And that answer does not look good for the likes of LinkedIn, Yelp, and especially Zynga.Here's the performance of publicly traded social networks (Google included) over the past week. Steep increases in a short amount of time, followed by some back-to-earth declines. And then, today: BOOM. Plummet and plummet and plummet again -- with a particularly steep drop for red-lining Zynga.
Here's a more detailed look at the hours after the Facebook IPO. Grim. Especially, again, for Zynga (which is down 15 percent today).
As with all things IPO-related, it's hard to tell much from today's plummets, other than that, as of this afternoon, they are plummets. They could be passing blips as the market, like everything else, accommodates itself to the hulking power of Facebook. They could also indicate that investors' interests have moved away from social networks whose ticker symbols are not "FB."
There's another interpretation, too. It could be that even before Facebook made its official entry into the public market, it was traded on that market -- spectrally, vicariously. Zynga, which accounts for around 12 percent of Facebook's revenue, may have functioned as a tradable stand-in for Facebook itself. And social networks in general -- LinkedIn, Yelp -- may have played the same role. Until buying the real thing was an option, you could buy yourself some proximity to that thing.
If that's the case -- and, again, we won't know until much later how things have shaken out -- it'll mean that the social networks, even more than they already do, will have to negotiate their strategies around the strategies taken by Facebook. Success will mean, even more than it already does, either distinguishing themselves from Facebook ... or ingratiating themselves to it.
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