Zynga disappoints in debut, drops 5 per cent

With an offer of 100 million shares, a seventh of the company's total, at $10 a piece, Facebook games maker Zynga, debuted at the market with a valuation of a whopping $7 billion.

Zynga, which makes Facebook games FarmVille, Mafia Wars and Words With Friends was initially trading on the Nasdaq market at around $11 a share, a 10 per cent premium, but by the end of the closing session it was down 5 per cent from its opening price. It slipped a bit further to $9.41 in after-hours trades.

According to analysts, the trading of Zynga today highlighted the difficulty of judging the true demand of hot IPOs.

Zynga's debut comes as the largest internet IPO offering after Google went public in 2004. It surpassed online bargain service Groupon, which raised $700 million when it went public last month, but later saw its stock price fluctuate wildly (See: Online games maker Zynga debuts on Nasdaq today with $1-bn IPO).

Despite concerns of some analysts that new internet stars were being grossly overvalued, investors lost little time in lapping up Zynga's stock. The company offered a thin slice of its stock of around 14 per cent to the public.

Analysts said investor appetite for technology stocks had not sated and Zynga had shown that it could make a profit.