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Zynga shares drop 11 percent, Nasdaq halts short-sales

A perceived drop in Facebook gaming has Zynga shares dropping even lower

Reuters reports that shares of Zynga have fallen 11.8 percent today, leading Nasdaq to put a ban on short sales until Wednesday. Zynga's stock dropped below $5 per share, reaching a low of $4.78 for the day, and currently sitting at $4.95. The sell-off started due to a report published by Cowen & Company, wondering if the Facebook gaming market was in an "accelerating user tailspin."

"We believe that interest in Facebook-based gaming may have reached a negative inflection point," Cowen & Co analyst Doug Creutz wrote, "as more casual gamers migrate to mobile platforms."

According to App Data, Zynga's daily active users dropped 8.2 percent to 54.2 million last month. While Zynga's stock remains 20 times ahead of its earnings according to Thomson Reuters data, the current share price is half the company's $10 per share IPO in December.

This is the second time Zynga trading has been stopped by the Nasdaq. The last time came on May 18, after investors freaked out over Facebook's IPO troubles.

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Latest comments (8)

Bruce Everiss Marketing Consultant 4 years ago
Buy.
Zynga have lots of good IP and lots of good people. They have been spending their IP money buying more.
Strategically they know what they are doing more than any other major game company.
Ultimately they are platform agnostic. They will use whatever platform it takes to reach their customers. If there is a transition from Facebook to smartphones then they will ride it. They know better than anyone else what is happening in the market.
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Antony Carter Senior Programmer, Epic Games4 years ago
The Bubble bursting?
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Ove Larsen4 years ago
I thought Zynga's problem was that they weren't able to repeat the miracle on other platforms.
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Show all comments (8)
Bruce Everiss Marketing Consultant 4 years ago
@Ove

Current #3 grossing on App Store is Poker by Zynga. 549 days, was #1 top grossing.
Draw Something is #21. Was #1.
Scramble with Friends #27. Was #2.

http://appshopper.com/bestsellers/gros/?device=iphone
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Fran Mulhern , Recruit3D4 years ago
Almost 10% drop in monthly users month on month. Stock 20 times ahead of earnings.

Bubble, indeed.
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Nicholas Pantazis Senior Editor, VGChartz Ltd4 years ago
@Bruce I would argue Zynga is still overvalued, and even in their best times have failed to earn the kind of money that people thought they were earning. With Facebook declining and iOS incredibly fickle and not remotely brand loyal (no one looks for Zynga games), there's really no reason to be confident that Zynga's size and "talent" will pull them back up.
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Gary LaRochelle Digital Artist / UI/UX Designer / Game Designer, Flea Ranch Games4 years ago
@Bruce

Zynga has yet to come up with an original title. Poker has been around for ages. Zynga bought Draw Something and Scramble with Friends.

Also, yesterday (June 12, 2012) the California Senator who is sponsoring an Legalize On-line Gambling Bill (SB1463) pulled the bill. If he does not reintroduce the bill by August 31th, the bill dies. This will lessen the chance that legalized on-line gambling will happen in California. And it will be another setback for Zynga. They have had their eyes on the legalized on-line gambling market.

Edited 2 times. Last edit by Gary LaRochelle on 14th June 2012 12:26am

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Lets be objective here.

Facebook games are on the wane, whereby mobile/tablet gaming is taking up the slack. As such, Zynga may arise again but not as a FB company due to its past acquisitions. Simples!
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