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10 Biggest IPO Flops in History

        Money | The Stock Market

9
Shanda Games
Shanda Games executives planned a huge IPO in the hopes that the company's popularity would extend to the U.S. They thought wrong.
Shanda Games executives planned a huge IPO in the hopes that the company's popularity would extend to the U.S. They thought wrong.
Imaginechina/AP Images

In China, Shanda Games is synonymous with the hugely popular online gaming market. A division of Shanda Interactive Entertainment, the company produces the multi-player online role-playing game "Legend of Mir" and manages the Chinese version of the online fantasy hit "Aion" [source: Reuters].

Following in the footsteps of other Chinese companies, Shanda planned a big coming out party with a U.S. IPO in September 2009. The company snagged the catchy ticker symbol (GAME) and hired heavy hitting underwriters JP Morgan and Goldman Sachs to set the IPO price and determine the number of shares to offer.

Feeling the time was ripe for a big payday, the underwriters bumped up the total number of shared from 63 million to 83.5 million at the last second [source: Petruno]. Then they set the opening share price at $12.50, the very highest end of the pricing spectrum.

The result appeared to be a bonanza, raising a total of $1.04 billion, the largest American IPO of 2009 to date.

Unfortunately, it turned out that the underwriters had gotten greedy [source: Petruno]. By pushing the price to the limit, they sucked up all of the investors willing to pay top dollar. With no new investors left to prop up the price, the stock took a huge and immediate loss of 14 percent, finishing the next day down $1.75, one of the worst IPO debuts of the year.