Want Some Facebook Shares? Think First About Recent IPOs’ Very Mixed Results

With Wall Street all atwitter and agog over Facebook’s potential valuations, perhaps it’s time to consider whether we’ve all underestimated other companies in recent public offerings. If Facebook is worth more than Morocco, shouldn’t FriendFinder Networks (FFN) be worth at least as much as Justin Bieber?

Probably not. FriendFinder’s fate – it faces delisting 7 months after watching its IPO value tank – only proved that even investors can be turned off by an adult hookup business. But Wall Street wasn’t much kinder to a lot of techish IPOs in the last couple of years. That is, it was not nice to the individual investors who bought them after the first day of trading. (Institutions able to buy at the offer price have made out in several cases where individual investors have not.)

Until Facebook launches, online couponer Groupon (GRPN) reserves the title of loftiest tech-company IPO valuation since Google (GOOG). Individual investors, however, might wish they’d thought less about the comparison when valuing the unprofitable company back in November. The market quickly determined it was worth at least 20% less than it was after the first day of trading, putting the shares pretty close to the official offer price.

Groupon Stock Chart by YCharts

LinkedIn (LNKD), the Facebook for professionals that officially launched at $45 a share on May 19, is still technically one of the most successful IPOs on record. But that’s little comfort for the individual investor who bought the shares for $83 at 9:30 a.m. opening day. His investment is down about 20%. Shares of Internet radio company Pandora (P) are also down about that much after its first trading day.

LinkedIn Corporation Stock Chart by YCharts

Motricity (MOTR), a company that was supposed to grow like weeds by licensing software for cell phones, has been a loser for almost everyone involved. Its shares launched in mid-2010 and are down about 95% in the past year. SMART Technologies (SMT), maker of those interactive projectors your kids’ teacher may or may not know how to use, is down more than 50% during that time.

Motricity Stock Chart by YCharts

There have been a few winners for individuals on the tech IPO front, generally from companies in less sexy businesses. Bankrate (RATE), which owns online banking sites, has gained more than 50% since its first day of trading in June. Shares of data security company Imperva (IMPV) have risen nearly 40% since its birthday in November. Even Zynga (ZNGA), a much hyped online game company (Farmville), has made money for investors since its December launch. It’s notable that Zynga launched at a quite low valuation on earnings, which unlike Groupon or LinkedIn, it had.

Imperva Stock Chart by YCharts

It’s still early days for all of those companies, meaning both the winners and the losers may yet surprise us. But they also might give pause for anyone considering a plunge right into Facebook, which is likely to launch as the highest-priced marketing company ever. Individual investors are mere peons in the IPO game, and if the buzz is hot, they generally pay up to play. Few and far between are the IPOs that are unquestionable gateways to riches for the Little Guy, the sort one lusts for looking at Google’s market cap. Given time, the market does a pretty good job of sorting out value. Sometimes it pays to wait.

Dee Gill is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.