Just when you thought Zynga shares couldn’t drop any lower, they did. A lot lower.
A 15% plummet in after hours trading is what has followed Mark Pincus revealing that his Farmville-making company is cutting forecasts. Now barely above $2, the game developer is just one more mistake away from becoming a penny stock—and a poster boy for the social media bubble should it ever burst.
Zynga, which relies heavily on Facebook—which, relatedly, is down nearly 50% from its IPO—debuted on the public market at $10, a price I and many others insisted was far too high (not unlike Facebook and Groupon’s equally foolish behaviour). Yet investors threw their money at the company, and its stock flourished, cracking $14.
That success was short lived however and gave way to a steady decline that has persisted relentlessly for the past six months. Now Mark is expecting his company to report a net loss of up to $105 million this quarter, further hammering early investors.
“The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction,” said Mark Pincus, CEO and Founder, Zynga. “We remain optimistic about the opportunity for social gaming and the power of our player network of 311 million monthly active users.”
Photo: Zuma Press/Newscom