After-hours trading sees social giant shares drop as much as 40%, net second-quarter losses of $22.8 million despite growing revenue.
Zynga's stock plummeted by almost 40 percent in after-hours trading after the social gaming giant released its second-quarter financial results today. The company's growing revenue reflected its expansion to mobile and other areas, but its large net losses sounded a warning bell to many traders.
Zynga reported a net loss of $22.8 million, in contrast to a net profit of $1.4 million in last year's second quarter. Its quarterly revenue came in at $332 million, up 19 percent from the same period of 2011 and up 4 percent from the year's first quarter.
The company's second quarter saw a decrease in average daily bookings per average daily user, a financial measurement that reconciles purchasing virtual currency with real currency. It attributed the 10 percent year-over-year drop in bookings from $0.051 in Q2 2011 to $0.046 this year to "new short-term challenges." However, its monthly unique paying users jumped 16 percent from the first quarter, rising from 3.5 million to 4.1 million.
Zynga lowered its yearly outlook to account for delays in launching games, declines in existing games related to changes on Facebook that favored new-game discovery, and reduced expectations for Draw Something, which was purchased along with its developer for $200 million in March. Several of Zynga's new and old games remain among the most popular on Facebook, including Zynga Poker, FarmVille, and the puzzle game Bubble Safari.
Maybe they'll start selling their stock in 4 for 1 fashion, just like they do their in-game digital crap. "Special for YOU only!"
You don't say. I have tried many of the social games on Facebook and gave up on all of them within 6 months. The only game I even play that's related to Facebook now is Family Feud and I just play that casually now.
When a company comes out of the gate very aggressively and doesn't seem to have a good long term plan... well, it's pretty obvious.
Hope people can ditch their stock while they still can.
Telling the true social games not future and they dieing out so soical gameing be no more next 5 years.
Well, we saw this coming didn't we? It was enormously successful, much too fast, and forays into the area of mobile gaming have rarely been explosively popular. Still, it's weird how much vitriol you see from gamers about this. Who cares if facebook users are having fun with a game? Mercenaries 2 isn't classier because you paid for it, and Farmville isn't trashy because it's free. Pricetags aren't a part of artistic expression, nor do they define a medium.
So much for the 'Free to Play' model being the future of gaming. Perhaps this will also remind companies that casual gamers are not a good long term source of income.
I don't know why anyone would think Zynga was a good investment. Casual gamers are too fickle to rely on.
ROFLMAO Did Mr. Pachter say that casual gamers won't buy Xbox 360, or PS3 because of FarmVille XD. Wrong again.
@Nintyfan95 I dont see how one implies the other. More like they arent playing anything at all. I dont see how you can jump to conclude that not playing farmville implies a purchase of a 299$ console.
I always wish for any gaming company to succeed with the exception to THIS company. Calling them a game company is an insult, but since they are grouped in this category, there is nothing I can do to convince otherwise. I find Zynga to be EVIL INCARNATE. They take IP from other lesser known developers and plagiarize it. I hope this company bankrupts and its CEO's tank in whatever endeavor they start up. In their own words "Stop trying to make new games, copy their games, make it better and take their players." That is the Zynga philosophy. I wish nothing but ill will towards that company.
@decoy1978 Yeah, I don't like Zynga either - charging people real money to buy make-believe stuff in a make-believe world with annoying characters and always ALWAYS shoving ads in your face about discounts and 'sales' on random junk. Their 'games' won't even let you advance unless you have a 100 friends who play the same thing and/or you are willing to blow a bunch of cash. Ugh, it's so obnoxious, I'll stick with real games where my hard work actually pays off >:(
@decoy1978 You should see the number of game ripoffs on facebook. Almost every casual game has a clone, knockoff or rip. And not just Tetris....
People still play Farmville?
Don't use Facebook myself, but I would have thought the mainstream crowd would have moved on to something else...