Zynga Shares Slip 18 Percent in One Day

Andy Chalk

One Flag, One Fleet, One Cat
Nov 12, 2002
45,698
1
0
Zynga Shares Slip 18 Percent in One Day


Zynga's share price plunged nearly 20 percent in a single day following the release of the company's first-ever quarterly financial report.

I don't know much about the stock market but I'm pretty sure that when a company's share value drops 18 percent in a single day, that's bad. And that's what happened to Zynga in the wake of disappointing quarterly financial results [http://investor.zynga.com/releasedetail.cfm?ReleaseID=648577] in which the company reported significantly increased earning but still posted a GAAP loss of $435 million. That loss was caused by the issuance of $510 billion of "stock-based compensation" to employees that was triggered by the company's December IPO.

Zynga also projected bookings of $1.35 to $1.45 billion for 2012, representing year-over-year growth of about 20 percent, a decent rate but still only half of the 38 percent year-over-year growth posted in 2011. Zynga COO John Schappert said the company's games were built for long-term growth, however, telling Reuters [http://news.yahoo.com/zynga-user-growth-disappoints-shares-fall-000516376.html], "That's why we still have the six-most played games on Facebook."

The big drop leaves Zynga shares at just a little over $12, which still represents significant growth over the $10 valuation of its IPO. At one point the company's share price dropped below $9 but had bounced back and climbed to over $14 prior to yesterday.

Despite the slowdown, analyst firm Robert Baird & Co. expressed confidence in the company's long-term positioning, writing in a research note, "While growth has slowed for both Facebook and Zynga, long-term secular shifts in content consumption, along with significant growth opportunities on smart devices from Apple and Google are too compelling to ignore."

Source: Develop [http://www.develop-online.net/news/39831/Zynga-shares-plunge-18-in-single-day]

Permalink
 

Vie

New member
Nov 18, 2009
932
0
0
Couldn't happen to a nicer company.

Well, unless it happens to EA or Ubisoft of course.
 

Ickorus

New member
Mar 9, 2009
2,887
0
0
As much as I'd like to see Zynga go down I can't help but feel just a little bad about it given how many people they employ.

That said, next time don't take a job for a company with such shady business practices I guess.

Colinmac93 said:
DVS BSTrD said:
Their stock prices went from Dream Heights to a Tiny Tower in just one day!
That is begging for a "YEEEEEEEAAAAAAAAAAAH!!!!!!" moment.

Better?
 

HammerIntoAnvil

New member
Jan 19, 2012
11
0
0
I wouldn't take this is a sign that Zynga is about to tank. It's not uncommon for large companies to see temporary drops in stock price following reports.

That said, Zynga is horrifically over valued (due to social gaming being a relatively unknown investment oppertunity). It's deflation is likely to play out over years rather then months or days however.
 

Krion_Vark

New member
Mar 25, 2010
1,700
0
0
HammerIntoAnvil said:
I wouldn't take this is a sign that Zynga is about to tank. It's not uncommon for large companies to see temporary drops in stock price following reports.

That said, Zynga is horrifically over valued (due to social gaming being a relatively unknown investment oppertunity). It's deflation is likely to play out over years rather then months or days however.
They are already back up by 4% today. I don't see them tanking for a while. But if the after trading closes prices keep dropping like this then I would expect them to tank after a while
 

draythefingerless

New member
Jul 10, 2010
539
0
0
FelixG said:
HammerIntoAnvil said:
I wouldn't take this is a sign that Zynga is about to tank. It's not uncommon for large companies to see temporary drops in stock price following reports.

That said, Zynga is horrifically over valued (due to social gaming being a relatively unknown investment oppertunity). It's deflation is likely to play out over years rather then months or days however.
One can hope and dream though!

I kid, as much as I dislike them I would be a bit sad if they folded, as a lot of decent people would lose their jobs
you call losing jobs, i call fresh meat to hire and mold to make them something better.
 

gigastar

Insert one-liner here.
Sep 13, 2010
4,419
0
0
You never really know how much you hate a company until you cheer at thier stock prices falling.

When i saw this i applauded for a whole 10 minuites.

vrbtny said:
The expression, "Timber!!!!!!!!!!!!!!!!!!!" comes to mind.
There are a considerable number of us here who would love to be the one to have wielded the axe.
 

Atmos Duality

New member
Mar 3, 2010
8,473
0
0
I need to see more of the long-term trends for this first.
Because Zynga potentially dying is just way too good to be true.
 

RA92

New member
Jan 1, 2011
3,079
0
0
To truly understand what kind of a monster social gaming is, I would ask you to read this: http://insertcredit.com/2011/09/22/who-killed-videogames-a-ghost-story/
 

isometry

New member
Mar 17, 2010
708
0
0
Fawxy said:
Andy Chalk said:
That loss was caused by the issuance of $510 billion of "stock-based compensation" to employees that was triggered by the company's December IPO.
WAT WAT WAT WAT

Breaking news: Zynga distributes half a trillion dollars to employees, inflation crashes stock market!

OT: This is interesting. Still, don't think it'll hurt them in the long run!
Yeah that typo jumped out at me too. I checked the article and the correct figure is $510 million. yay number sense!

OT: I enjoy watching these corporations burn for embracing the casual fad to the detriment of 'hardcore' gamers.
 
Jun 7, 2010
1,257
0
0
DVS BSTrD said:
Their stock prices went from Dream Heights to a Tiny Tower in just one day!
You have just won the internet. All of it. Ever.

OT: I don't think this is the end of the world for zynga, it's not good for them, but they're not going to crash down to the ninth pit of hell overnight.
 

Baresark

New member
Dec 19, 2010
3,908
0
0
Matthew94 said:
Did nobody read how they were originally valued at $10 per share and are still at $12. I doubt they are worrying.
That is a good point, but you must not put too much stock into Bernoulli's Expected Utility Theory. It was demonstrated that absolute wealth doesn't matter because it lacks reference. If it dropped 18% today, even though it is higher than they started at originally, all anyone can notice is fall. What you see is all there is.

OT: I'm not really surprised that it's dropping. They also took Bernoulli's theory at face value. It follows the general economic theory (alive and thriving today still) that states, "The agent of economic theory is rational, selfish, and his tastes do not change". Tastes change all the time because the vast majority of people are driven by subconscious motives that follow that golden rule, what you see is all there is.