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Zynga Loses 20% Value Overnight, Drops to $1.8B

By - Source: Zynga | B 17 comments

There is little doubt that social media and casual gaming are hot areas for money to be made in the future, but the leading companies in this space are having a tough time providing investor confidence.

Zynga, which remains Facebook's most important developer with more than 333 million monthly active users, disappointed once again with lower than expected revenue as well as a considerable loss for the third quarter.

The company said that it now expects sales to come in between $300 and $305 million and the net loss to be between $90 and $105 million. The Q3 result will include a write-off between $85 million and $95 million to compensate for a lowered value of OMGPOP, which the company acquired in March of this year for an undisclosed amount, while rumors suggested Zynga could have paid as much as $180 million.

Along with the sobering result, Zynga lowered its financial expectations for the full year due to delays of new games and "reduced expectations for certain web games including The Ville". Investors reacted immediately after the release of the financial update and sent the stock down more than 20 percent overnight. Zynga's stock dropped as low as $2.21 and was trading at $2.35 at the time of this writing. The company's capitalization is down to just $1.77 billion.

Zynga stock peaked at $14.69 in March of this year. Back then, the market capitalization was $11.1 billion.

Not surprisingly, Zynga's result dragged down Facebook's stock from a market close of $21.94 yesterday to an opening of $21.46 today.

 

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Top Comments
  • 18 Hide
    Thunderfox , October 5, 2012 11:17 PM
    Good. Both of the companies were overvalued to begin with.
  • 13 Hide
    teh_chem , October 5, 2012 11:51 PM
    Heard Zynga is a pretty wretched place to work. That they have hellish release cycles.

    Then again, when you shamelessly steal other game ideas, how hard could it be, really...?
Other Comments
  • 3 Hide
    spartanmk2 , October 5, 2012 11:15 PM
    Bazing, I dont care :D 
  • Display all 17 comments.
  • 18 Hide
    Thunderfox , October 5, 2012 11:17 PM
    Good. Both of the companies were overvalued to begin with.
  • 13 Hide
    teh_chem , October 5, 2012 11:51 PM
    Heard Zynga is a pretty wretched place to work. That they have hellish release cycles.

    Then again, when you shamelessly steal other game ideas, how hard could it be, really...?
  • 3 Hide
    jupiter optimus maximus , October 6, 2012 12:22 AM
    The people at Zynga got over their heads with greed. Who in the right investor mind would say: "Yes, i can see a social game website being used in a different social network company, be worth more than $11 billion." Since it already has 330 million active users, how much more can you ask? Its not like every 7 billion person on earth has a computer, internet and time to actually use such medium.
  • 6 Hide
    A Bad Day , October 6, 2012 12:41 AM
    Damn if you can't meet the stock analysts' predictions, damn if you do (which would lead to prediction of even greater revenue).
  • 6 Hide
    JOSHSKORN , October 6, 2012 5:02 AM
    What's Zynga?
  • 8 Hide
    Onus , October 6, 2012 6:03 AM
    JOSHSKORNWhat's Zynga?

    My Universal Translator returned "Waste."
  • 7 Hide
    esrever , October 6, 2012 6:12 AM
    If you look at that logo the right way, its a dog trying to take a shit on something called zynga.
  • 0 Hide
    Afrospinach , October 6, 2012 7:02 AM
    A Bad DayDamn if you can't meet the stock analysts' predictions, damn if you do (which would lead to prediction of even greater revenue).


    Maybe the analysts are just a big consortium of short sellers manipulating market expectation for profit /tinfoilhat
  • 1 Hide
    wildwell , October 6, 2012 8:44 AM
    Yeah, Zynga's suppose to have a horrid work environment, especially if you were an employee that chose to hold his stock instead of cashing it out right after the IPO when so many other employees did.
  • 1 Hide
    cookoy , October 6, 2012 12:07 PM
    Easy come, easy go. The last one holding the bag eats shit.
  • -1 Hide
    hetneo , October 6, 2012 3:02 PM
    afrospinachMaybe the analysts are just a big consortium of short sellers manipulating market expectation for profit /tinfoilhat

    If you presume that such thing can be said only by conspiracy theorist/crazy person you are in for a big surprise when you find out that reality is much crazier. Whole theory of measuring economic strength of company using market share is tower hanging in thin air. Just like the tier 3 capital is profitable investment.
  • 0 Hide
    may1 , October 6, 2012 3:20 PM
    I always knew, even before all the analysts started to say that social gaming and SNS sites will be the next big thing, that those services were truly overrated, and they will never even beat traditional gaming and communication services in terms of cashflow and profitability.
  • 1 Hide
    JonathanR , October 6, 2012 5:37 PM
    The only thing that surprises me here is that the company was so overvalued to begin with...
  • 1 Hide
    bin1127 , October 6, 2012 6:57 PM
    and they say there is no tech bubble.
  • 0 Hide
    luciferano , October 7, 2012 6:52 AM
    Zynga is a company that doesn't sell any product. What did they expect to happen when they went public, that people would bat their eyes at the not having a selling product issue? Zynga relies on other companies' sites to use their F2P games and gets paid in advertisement revenue. They rely on people clicking on adds rather than actually selling a product. With people not clicking many ads, they were bound to fail. That's generally what happens to companies that don't sell anything.

    That they relied on a social networking site is even more stupid. Those things come and go in a matter of a few years and even while they're there, they are not reliable sources of income.
  • 0 Hide
    darkavenger123 , October 7, 2012 1:32 PM
    Serves them right....they screwed up Draw Something when they took it over and force you to login to Facebook and all sorts of crap. Can i sue them to get back my 2 bucks or something??