I’d like to say that “We live in interesting times,” but I’m pretty sure almost everyone throughout history has made such a statement. Either way, the strength of investor sentiment towards anything tied into social media is an interesting phenomena. Is the social/mobile revolution going to live up to the hype?
Based on LinkedIn’s valuation, it appears that many in the market believe that we are yet to grasp the full implications of social media. Maybe they’re right or maybe they’re wrong. Either way, the general sentiment/momentum of the market currently is toward the darlings of the social/mobile revolution.
Upon today’s news release that popular social/mobile game developer Zynga is going to file paperwork for an IPO in the near future, Glu Mobile (GLUU) popped by over 21%. (If you are unfamiliar with social/mobile game developer GLUU, I would recommend you visiting a post in which I recommended the stock back in January 2011.)
If the Zynga IPO behaves as the LinkedIn IPO did, doubling from its set IPO price on the first day, then GLUU will certainly feel the tailwinds of Zynga. We saw from the news today how strong those tailwinds can be.
Secondly, last week when LinkedIn came charging out of the gates, QuePasa (QPSA) caught a nice tailwind from the LinkedIn IPO and ran up over 30% at one point on the day. QPSA is a social networking companythat targets Spanish and Portuguese speaking countries. What most people do not know is that they are also a social media game company.
QPSA’s primary social media game offering is titled Wonderful City and is available via www.QuePasa.com or www.Okut.com (a social media site owned by Google). Based on current user figures, the game Wonderful City has between .8-.9 million users/players between the two networks. The game was released a few weeks ago. Based on current growth rates, it should hit 1 million players by early next week. The company also plans to offer the game to Facebook users in the near future.
If you’re an investor that is willing to take on a decent amount of risk, I would monitor news about the upcoming Zynga IPO filing and any press releases that tout game growth from either GLUU, QPSA or other social/mobile game companies. Social media and online gaming have been very hot areas in the market since the beginning of the year.
Disclosure: Long QPSA