Zynga shares ( $10 in IPO) crash to $3.18 as 'everything goes wrong'
Shares in online games company Zynga, whose IPO last year at $10 a share "fueled an Internet investment frenzy" as the Wall Street Journal put it, crashed 40% yesterday after weak quarterly results.
Zynga helps Japan ... now it needs help
The New York Times said caustically, "The social games developer Zynga is withering faster than neglected corn on its signature hit FarmVille."
The San Francisco company reported a loss for its second quarter, its year-over-year revenue growth dropped to 19% from 32% in the prior quarter, and Zynga lowered its full-year outlook.
The games firm is a major element of Facebook and the plunge raised doubts about Facebook's own figures later today - the first as a public company. Facebook shares were down 8% to $26.99,
In after-hours trading yesterday , Zynga's stock bottomed yesterday at $3.05, down nearly 70%, from the $10 at which the company went public late last yearIPO figure. Its market capitalisation shrank to under $4 billion: it was $10 billion last December .
The NYT said just about everything went wrong at once for Zynga.
Facebook made changes to its gaming platform that hit Zynga regulars. a critical new game, the Ville, was delayed and another new game, Mafia Wars II, just was not very good.
“Facebook made a number of changes in the quarter,” John Schappert, chief operating officer, said in a conference call with analysts. “These changes favoured new games. Our users did not remain as engaged and did not come back as often.”
In a conference call, analyst Richard Greenfield of BTIG, pointed out to Mark Pincus, Zynga’s chief executive, that he had sold stock at $12 a share shortly after the public offering.
After the call, Greenfield downgraded Zynga’s stock to neutral from buy in a report entitled, “We are sorry and embarrassed by our mistake.”
In an interview, . Greenfield said: “Right now, everything is going wrong for Zynga. In a rapidly changing Internet landscape that is moving to mobile, it’s very hard to have confidence these issues are temporary.”
Most Zynga games are free. The company makes money from users who buy virtual goods like tractors in FarmVille. Over the last year, the average daily amount of money Zynga took in from these core users dropped 10 percent .