Jive Sees Success in Smaller IPO

by PATRICIA HolmesUncategorized

Some of the hopeful expectations about the initial public offering market opening up in the wake of the recent Groupon IPO have been borne out to an extent with the somewhat smaller offering by Jive Software on Tuesday.

The Wall Street Journal reports that Jive, a producer of social networking tools used by businesses, was initially expected to price this week at between $8 and $10 per share, giving the company a valuation between $458 million and $573 million.

With market demand high, however, Jive followed Groupon’s example and unexpectedly raised its offering price to $12 per share, giving the company a market valuation of more than $687 million.

Even at this higher price, however, the company saw so much interest that its underwriters – Goldman Sachs and Morgan Stanley – ended up selling 2.7 million more shares than initially planned, bringing the total to 13.4 million.

The stock performed well on its first day, closing up 25.42 percent at $15.05 per share and holding largely steady throughout the day. This reflects a slight improvement over recent offerings like Groupon, which often saw a drop after initial trading, but over the course of the year essentially all newly public technology companies have experienced substantial drops.

Disappointed Investors Turn Hopefully to Zynga

by PATRICIA HolmesBusiness

Investors and companies once again find themselves hoping that Zynga can provide a spark for the IPO market.

Initial public offerings are always an uncertain investment to an extent, with companies often going public without a long-proven track record of success, sometimes looking for the funds necessary to keep the company going. The 2011 IPO market has not proven any easier, with many companies canceling or delaying their IPOs over the summer as the global economy suffered a downturn with both the U.S. and Europe struggling through debt crises.

Ultimately many analysts and even companies have found themselves looking from one high-profile IPO to the next, hoping that it would perform well and provide some encouraging signs for investors. Most recently, daily deals site Groupon completed a $700 million IPO, but it quickly followed the same pattern of most other companies this year and slumped below its early trading prices.

But Forbes reports that online gaming company Zynga, the creator of popular mobile and Facebook games like FarmVille and Words with Friends, stands a strong chance of surviving where many others have not. Valuing itself at $7 billion, Zynga has set far more modest goals than some recent IPOs and actually manages to back it up with a well-established business model that has already managed to make substantial profit – $30 million on $829 million of revenue over the past nine months.

Indeed, Bloomberg reports that Zynga announced on Thursday, December 8, that the company already has enough orders to cover the sizable portion of shares it intends to sell – 14 percent of common stocks, well more than many recent IPOs – at a price range of $8.50 to $10 per share.

Bloomberg notes that Zynga has given itself a substantially larger price-to-sales ratio than some of its primary competitors, but this still compares favorably with other IPOs seen so far this year.

Meanwhile, The Chicago Tribune reports that Zynga founder and chief executive officer Mark Pincus claimed at a luncheon in Boston that his company could reasonably double the number of players who actually pay for the company’s games. At present, paying customers account for only 3 percent of the 6.7 million players of Zynga games.

Investors are likely to remain wary after a bed that saw collapses from essentially every major IPO, but Zynga nonetheless offers as much promise of a spark as any of those earlier entrants held.

Five new ETFs will be offered by fund provider Direxion

by PATRICIA HolmesPersonal Finance

Fund provider Direxion announced recently that it will soon offer five new exchange-traded funds (ETFs), with two of them becoming available in December and the others becoming available in January.

Direxion All Cap Insider Sentiment Shares ETF and Direxion Large Cap Insider Sentiment Shares ETF, which are both based around stocks chosen from different Standard & Poor’s indices, will start trading in December, according to Reuters.

Andy O’Rourke, director of marketing at Direxion, informed the media outlet that both of the funds that will start trading in December will take long positions in stocks being purchased by fund insiders and short stocks being sold by these same officials.

The fund provider will then offer three ETFs in January which are based on reacting to volatility. The new financial instruments will increase their allocation to cash when the volatility in the underlying indexes surpasses a threshold level and put more money back into equities after falling below this threshold level, the media outlet reports.

ETFs can benefit investors by giving them easy access to diversification with low fees. Young investors planning for events such as retirement can benefit form researching these financial instruments.