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Niigata Global - Zyngas Rise And Fall?

Niigata Global: Social gaming company Zynga saw their share price freefall after announcing their second quarter earnings.

Market Press Release – September 5, 2012 11:42 am
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Penny Molnar


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Zynga Inc, the maker of social gaming phenomenon Farmville, missed their second quarter targets and slashed their outlook for the year, sending their stock crashing by 41%. “Investors will now be expecting a larger hit to earnings for Facebook” according to a specialist in correspondence with Niigata Global. Farmville provides for around 15% of Facebook’s revenues, and the social networking giant saw their share price fall by 7% reaching a new low of $27.

Zynga’s Q2 revenue was at $322 million, up 19 percent year-over-year. The company’s Q2 bookings were also looking pretty splendid at $302 million, or up 10 percent year-over-year. The company also saw increases in daily active users, monthly active users and monthly unique users.

“The company achieved some significant milestones in the quarter including the launch of Bubble Safari, which is now the number one arcade game on Facebook, and the launch of The Ville, now the number two game behind Zynga Poker. Our advertising business continued to show strong growth with revenue up 170% year-over-year. Our games reached record audiences, achieving over 300 million monthly active users. We grew our mobile footprint five-fold in the year to 33 million daily active users making Zynga the largest mobile gaming network,” said Mark Pincus CEO and Founder, Zynga. “We also faced new short-term challenges which led to a sequential decline in bookings. Despite this, we’re optimistic about the long-term growth prospects on mobile where we have a window of opportunity to drive the same kind of social gaming revolution that we enabled on the web.”

Zynga laid the blame for their poor performance on a sharp drop off of players of its core Facebook games and slashed its earnings forecast, predicting between only 4 and 9 cents a share, compared to previous expectation of between 23 and 29 cents.

“This quarter and forecast revisions is nothing short of a complete disaster,” remarked an analyst conversing with Niigata Global, “They are introducing more new games but to no real effect. It is really starting to look like a fad rather than a solid product.”

Zynga was one of many very hot internet IPO’s to launch last year, however, like Groupon and Facebook that have lost 65% and 29% of their IPO price respectively, Zynga is down almost 70% from its $10 launch. While the company got their start on Facebook, they are definitely moving away from the platform.

29% of Zynga’s quarter revenues were accounted for by Farmville, which has seen its active user base shrink by 75%, from 80 million in the first quarter to just 20 million by the end of the second quarter, according to data independently rated for Niigata Global.


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