SOURCE: Five Star Equities
NEW YORK, NY--(Marketwire - Jul 19, 2012) - Social media stocks have lost their appeal among investors in 2012 as many companies have seen shares drop below their IPO valuations with some recently hitting new 52-week lows. Shares of Facebook and Zynga fell after a report released by Capstone Investments showed that the number of users of the social media site has declined. Five Star Equities examines the outlook for companies in the Social Media Industry and provides equity research on Facebook Inc. (NASDAQ: FB) and Zynga Inc. (NASDAQ: ZNGA).
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Rory Maher, a Capstone analyst, said in the report that in the last six months Facebook users in the U.S. declined 1.1 percent. Maher added that 14 of the 23 countries in which Facebook had at least a 50 percent market penetration either decreased or saw little change in the last three months.
"This could be an issue for Facebook growth since we estimate that outside of Southeast Asia and some countries in Latin America, most markets are approaching 50 percent penetration," Maher said in the report.
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Yahoo! and Facebook earlier this month announced that they have entered into definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements, and settle all pending patent claims between the companies. Under the agreements, which include a patent portfolio cross-license, the parties will work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo! and Facebook.
Zynga, the world's leading provider of social game services, recently entered into an agreement with Majesco Entertainment to publish Majesco's latest social game Mini Putt Park. Zynga is scheduled to release second quarter 2012 financial results after market close on Wednesday, July 25, 2012. Shares of the company have fallen over 50 percent this year.
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