Zynga's Share Price Continues To Plummet

After a second significant drop in monthly users, Zynga's share price dropped as far as 13% yesterday, a drop so sharp that Nasdaq issued an alert prohibiting further short selling of the stock. Zynga's share price has now halved since its initial IPO in December.

As reported by the Chicago Tribune, many investors and analysts now believe that the viability of Facebook games has reached a turning point.

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

Forbes has been touting EA as an alternative on the share market, as their games continue to experience growth on the Facebook platform, but some investors seem to have become wary of the Facebook platform as a whole, particularly when it comes to games.

Most investors believe that gamers in the casual space are migrating to the mobile platform in the short term. If companies like Zynga don't adapt to this sea change, its share price may continue to plummet.

Zynga's acquisition of OMGPOP for over $180 million was also criticised, and seen as a rash move, particularly in the face of Draw Something's dramatic drop in user base.

Our view is that Zynga's shares were massively overpriced to begin with, so some correction was inevitable. Zynga has proven adept at navigating these kind of struggles, and squeezing revenue from their properties, so we don't think it's quite the disaster some analysts believe it to be.

That said, Zynga will have to make some changes if it is to reverse these negative trends.


    The games just aren't fun as a non-paying user, even though there's ads everywhere. I think that's what turned off most players, the free to play model full of pop-ups asking you to buy more and wall post spam.

    I think the problem is that Zynga just has a bit too much money, it doesn't force you to be smart about your decisions. No way would they have bought OMGPOP if they actually thought about it at any length.

    These slap-together companies really have no idea what gaming is about. They talk about people as if they are herds of animals migrating to different territory. Any self-respecting gamer could see this coming ages ago. No way in hell companies like this can survive in the long term. They're just massive get rich quick schemes, really, and have nothing to offer the game industry and game development in general.

    Just further proof that half of all business analysis is pulling something out of your arse, tacking on a few complicated words and sharing your opinion to the general public. Internet trolls and most of the gaming public have said for years that Zynga's model is unsustainable. Apart from Forbes (they actually have a pretty good track record with gaming, some decent writers too) the rest of the business media could benefit from hiring a few neck beards to give them a fresh perspective.

    This week draw something decided I can't play if I don't let it send me emails.

    Goodbye draw something

    Every company like Facebook & Zynga (whose business is counting users- that's what it really is) that launches themselves onto the stock market, are always going to have an overvalued IPO price. You'd be a complete idiot to buy into them. I do hope they nab those people for insider trading on Facebook stocks though, the watchdog system should've seen this coming in this economic climate, it was always going to happen.

    These companies are a disaster waiting to happen, and their worth can become zero overnight with a change of the wind, and potentially bring down the whole 'company'.

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