Zynga Share Price Crashes

Zynga Share Price Crashes

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Zynga blames Facebook for a disastrous second quarter that saw its share price plummet by more than 40 percent.

Despite CEO Mark Pincus' best efforts to put a positive spin on the situation, the fallout from Zynga's second quarter financial results are nothing less than an absolute train wreck. Earnings of $332.5 million for the quarter were actually up 19 percent year-over-year but fell short of the predicted $344.8 million, and while that represents a shortfall of less than ten percent it resulted in a plunge of more than 40 percent in the company's share price in after-hours trading. Zynga shares dropped from just over $5 - itself a far cry from its $10 IPO and peak of $15.91 - to as low as $2.97, before bouncing up to a little over $3, where it currently sits.

"Our games reached record audiences, achieving over 300 million monthly active users. We grew our mobile footprint five-fold in the year to 33 million daily active users making Zynga the largest mobile gaming network," Pincus told investors.

"Getting beyond the Facebook web footprint through mobile is going to give us more growth opportunities for games," he added.

In fact, Zynga pointed the finger of blame for its woes at its old social gaming partner, saying that changes to the way Facebook promotes games favors new releases over older ones. "Our users did not remain as engaged and did not come back as often," said Zynga COO John Schappert. "Instead new games were promoted."

Schappert did express optimism about Zynga's upcoming slate of new games, including Chefville and a new FarmVille, which he said is "reimagined from [the] ground up and looks amazing," but the company has nonetheless reduced its outlook for the fiscal year. "We are lowering our outlook to reflect delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform and reduced expectations for Draw Something," Zynga said. The company paid roughly $200 million for Draw Something developer OMGPOP in March, but the game's popularity has tailed off rapidly and dramatically since the acquisition.

Source: Financial Times, Develop

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Do you taste that? That sweet, beautiful taste?

Thats the taste of Pincus's oncoming tears. The tears of some admitted conman as his piggy bank crumbles.

Least I hope.

Captcha: Run the gauntlet
Brilliant idea Captcha! Make him run the Monarch's gauntlet! I may actually start developing a bit of attachment to you Captcha if you keep these great ideas flowing.

This news pleases me twice over, firstly I spread bet on their stock going down so I have made about 350 and secondly because they have had questionable business practices and I just plain don't like them.

All this and the Sun is shining? Its a good day!

Or instead of blaming others they should realize that when they

everywhere, release the same exact game, plagiarize,offer no innovation or any real lasting impact in their games, and basically force you to pay if you want to make any real progress people will stop giving their games attention.

Andy Chalk:
In fact, Zynga pointed the finger of blame for its woes at its old social gaming partner, saying that changes to the way Facebook promotes games favors new releases over older ones. "Our users did not remain as engaged and did not come back as often," said Zynga COO John Schappert. "Instead new games were promoted."

Yes. That's most definitely a problem with the platform and not the game itself. Next time people stop playing a game on a console, I'd love to see the developer blame the console.

The tragedy! ;_;

I'd feel sorry for them if they weren't so E-Ville

10 bucks sez he's gonna blame piracy and americans who hate their freedoms next.

I like LRRs take on this about a year ago,

http://penny-arcade.com/patv/episode/acts-of-ville-ainy

*Blaming FB pushing newer games over their games*

Translates to

*Oh my god, other games besides our games actually exist?! And people PLAY them?!?! MADNESS!!!!*

I'm not a fan of Zynga, but I think it's pretty silly that earning expectations a little off of projections can cause the stock to crash like this.

It seems their horrible business practices are catching up with them. When you combine that with other, far less evil, developers making better social networking games it's really not a good time to be Zynga, and that's a good thing.

Hungry Donner:
I'm not a fan of Zynga, but I think it's pretty silly that earning expectations a little off of projections can cause the stock to crash like this.

Guidance is what keeps investors feeling confident in a given market. When a company's guidance is off by more than a marginal amount (1-2%) without a concrete reason for it (say, making some large purchase they hadn't planned in the previous quarter, thereby adding to future potential capital but lowering their current-period income because of the expenditure), red flags go up.

It does seem like an overly dramatic plunge, though.

Andy Chalk:

In fact, Zynga pointed the finger of blame for its woes at its old social gaming partner, saying that changes to the way Facebook promotes games favors new releases over older ones. "Our users did not remain as engaged and did not come back as often," said Zynga COO John Schappert. "Instead new games were promoted."

Yes, how dare Facebook promote new games over old ones.

/sarcasm

Am I a bad person if that graph brought a smile to my face when I first saw it?

Oo-oh, sometimes, i get a good feeling. I get a feeling that i never ever had before, i get a good feeling, yeah!

Good move Yearbook, maybe now i'll get back to playing games on you.

Maybe!

Wow, look at that drop in price. You could base jump off that.

Shjade:

Hungry Donner:
I'm not a fan of Zynga, but I think it's pretty silly that earning expectations a little off of projections can cause the stock to crash like this.

Guidance is what keeps investors feeling confident in a given market. When a company's guidance is off by more than a marginal amount (1-2%) without a concrete reason for it (say, making some large purchase they hadn't planned in the previous quarter, thereby adding to future potential capital but lowering their current-period income because of the expenditure), red flags go up.

It does seem like an overly dramatic plunge, though.

True, and if a prediction causes stock to rise (or keeps it buoyed) then failing to meet those expectations should cause a correction. And while I can't blame tech stocks for being a bit jittery the severity of this drop seems silly.

captcha: how about that?

This my friends; is that sweet little angel called karma! You be evil and you get crapped on! ... Eventually...

Yeah...These guys won't be getting sympathy from me any time soon. Someone get the popcorn, this is sure going to be one fun ride and I wouldn't miss it for the world.

Isn't THQ's stock sitting around 4-5 USD? *checks* It's 5.06.

 

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