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Zynga Stocks Hit All Time Low
Things aren’t looking good for Zynga. Their profits have been steadily declining for months, and today the value of their shares fell to $5, the lowest they’ve ever been, according to Reuters. Nasdaq has put an automatic temporary ban on the company, which occurs whenever a stock falls more than 10% in one day. Ouch.
It isn’t a coincidence that this drop mirrors the decline in Facebook gaming, which had been a gold mine for Zynga. “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.”
Zynga had hoped to capture the mobile space as well, and achieved success with the wildly popular app Draw Something. Unfortunately interest, and playtime, for Draw Something has waned considerably as of late, dropping almost 30% in the last month. Analysts point to this as more proof of the diminishing social game landscape, but warn that you shouldn’t count Zynga out.
I never got into Facebook gaming, but I had a lot of friends who did, and some who still do. Overall though, it seems the trend has calmed down significantly. I hate to see any video game company go down, but if this means the end of those bloody CityVille requests, then so be it.