I was a guest on Bloomberg the day that Zynga started trading. It was Friday Dec 16th. On the show I said something approximately like

Zynga’s trading today should be a big worry to Facebook shareholders. This is the first time that stock with a massive secondary selling overhang is going public. This problem will only be worse for them. Facebook may very well break its offer price the way Zynga did.

Facebook opened up 10% and within an hour hit is offer price. Almost the exact same price action in the first hour of trading as Zynga. I have a theory, which I alluded to back in December.

When you have billions in stock bought by institutions (at prices like $3b, $10b, $20b market caps), there is a large pressure to sell, even at the offer price. That’s why Facebook upped the size of the offering and tried to get EVEN more insiders to sell, thus alleviating the pressure.

Let’s see where it closes, but if Zynga is a guide, it will close below its offer price. I hope I am wrong, but we are in a new world of IPO rule book…