Why Zynga Inc (NASDAQ:ZNGA) lost it’s luster?

Posted by Lynn Eisler September 18, 2013 0 Comment 1715 views

The fact is that Zynga Inc (NASDAQ:ZNGA) once had a zing, it was a company with a lot of potential but is devoid of all luster now. Its games will continue being popular but investors are shying away from it. Over the past 2 years, the stock has dipped by 67.6%. It captured the social gaming space within a very short time but does not display a competitive edge any longer. Mobile platform is the future of gaming and this is exactly where the company is faltering.

In 2013 April, Zynga Inc (NASDAQ:ZNGA) launched real money online gaming in the U.K via ZyngaPlusCasino.co.uk and ZyngaPlusPoker.co.uk. Downloadable games were launched via Bwin.party (PYGMF.PK) as well. It will leverage its partnership with the latter and feels that this can be a traffic-attraction magnet.

Its challenges

There was also a time when the company was a muscled contributor to FB’s other fees and payment segment revenue but that too is on the downslide. In 2011, its contribution was 12% while in 2012 that was only 9%. In 2012 November, the social giant went onto amending its Zynga partnership and disallowed it from promoting its website on their platform. The mobile gaming business is the company’s major challenge space as many publishers and video game developers have started launching their own games on tablets and mobiles.

An EA subsidiary and video game developer, PopCap Games released the “Plants Vs Zombies” sequel in 2013 August and has already gone onto recording 25M downloads. Also, the dipping earnings estimate does not bode well for the company. At the moment, Zynga Inc (NASDAQ:ZNGA) does not really look like a good buy at all.

Tuesday’s trading

In Tuesday’s trading, Zynga Inc (NASDAQ:ZNGA) rose 5.835. The opening price of the shares was $3.10 which rose to an intraday high of $3.30 and then dropped to a close of $3.27.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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