Shanda Games, a spinoff of Shanghai-based online games publisher Shanda Interactive Entertainment, raised the largest IPO in the U.S. since April 2008, $1.04 billion, selling 83.5 million shares at $12.50 each with today's debut.

But that price fell $1.75, or 14 percent, to $10.75 after Shanda's first day of Nasdaq trading. The company originally intended to sell 63 million shares for around $10.50 to $12.50 before changing its mind and increasing the IPO's size by 32.5 percent earlier this week.

Shanda Interactive's published titles in China include MMORPGs such as MapleStory, Dungeons & Dragons Online, Ragnarok Online, Aion, and many others. Generating $321.9 million in revenue for the first half of 2009 (a 43 percent year-over-year increase), the company is currently the country's largest online games operator, ahead of other local publishers like NetEase and Tencent.

The IPO's halfhearted reception contrasts Changyou.com's, another Chinese gaming spinoff (from Sohu) that launched its own IPO earlier this year. Changyou.com raised $120 million last April and saw its share price jump 25 percent on the first day of trading. The company is now trading at 126 percent over its initial IPO price.

Though CEO Diana Li says Shanda Games is pleased with the IPO and has a "very long vision" for the company, some analysts argue that the publisher's valuations are inflated, and recommend that investors sell their shares.

"People believe Shanda Games has been priced at market," Pali Capital analyst Tian Hou told financial news site Bloomberg. "What’s the room to go up if it’s already priced at market?"