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.
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Wolfgang Gruener is an experienced professional in digital strategy and content, specializing in web strategy, content architecture, user experience, and applying AI in content operations within the insurtech industry. His previous roles include Director, Digital Strategy and Content Experience at American Eagle, Managing Editor at TG Daily, and contributing to publications like Tom's Guide and Tom's Hardware.
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teh_chem Heard Zynga is a pretty wretched place to work. That they have hellish release cycles.Reply
Then again, when you shamelessly steal other game ideas, how hard could it be, really...? -
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.Reply
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A Bad Day Damn if you can't meet the stock analysts' predictions, damn if you do (which would lead to prediction of even greater revenue).Reply -
esrever If you look at that logo the right way, its a dog trying to take a shit on something called zynga.Reply -
Afrospinach 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).Reply
Maybe the analysts are just a big consortium of short sellers manipulating market expectation for profit /tinfoilhat
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wildwell 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.Reply