Zynga Loses 20% Value Overnight, Drops to $1.8B
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.
Then again, when you shamelessly steal other game ideas, how hard could it be, really...?
Then again, when you shamelessly steal other game ideas, how hard could it be, really...?
My Universal Translator returned "Waste."
Maybe 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.
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.