Analyst: Stock Market Values Zynga At Below Zero

Zynga may hold the title of most popular Facebook application developer with 327 million monthly active users, but it appears investors care very little about this fact.

J.P. Morgan analyst Doug Anmuth recently stated that Zynga's market capitalization, about $1.87 billion at the time of this writing, has fallen below the total value "of the cash it has on hand, the securities it owns, and the amount it paid in March for its San Francisco headquarters." At the end of June, Zynga's total assets were value at about $2.7 billion, which means that the market values Zynga's actual business at below zero.

A report published by the LA Times cited additional negative analyst notes, one of which raised the concern of "significant" layoffs in the coming months. At this time, it appears that Zynga has lost all investor confidence and will need a major turnaround to regain the trust it once had.

That turnaround may not come soon enough, as the company announced last week that it expects to report a net loss of between $90 million and $105 million for the fourth quarter, mainly due to a $85 million to $95 write-down on the Draw Something acquisition. Zynga also lowered its full-year outlook to revenues of $1.085 billion to $1.100 billion, down from $1.150 billion to $1.225 billion. The shortfall was attributed to delays of "several" games as well as "reduced expectations for certain web games including The Ville."

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