​Zynga Stock Tumbles Amid Announcement

Author: Jennifer HongBy:
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July 27, 2013

Zynga lost 17 percent of its stock last week after announcing that it will drop plans for a US gambling license. Zynga says the plan fell apart, which would allow its casino-type online games to use real money. 

Investors cashed in their shares Friday after the company said it was dropping its plans to pursue online casino-style games in the United States.

The company still plans to test a gambling product in the United Kingdom.

Zynga posted second-quarter earnings late Thursday and reported that it had trimmed its losses. The company has been cutting staff to reduce costs.

When Zynga went public late 2011, its games, such as “Farmville” and “Mafia Wars,” were the most popular on Facebook. Things have changed since then. King.com, the maker of “Candy Crush Saga,” has unseated Zynga as the top social games maker.

The second-quarter results were Zynga’s last under the direction of founder and CEO Mark Pincus. The company brought aboard former Microsoft executive Don Mattrick as CEO , who ran the Xbox video game business.

Mattrick is well-regarded in tech circles and there is some optimism in his ability to turn Zynga’s fortunes around.

Wedbush analyst Michael Pachter sees changes within Mattrick’s first 180 days at the company. “We believe Mr. Mattrick will act swiftly to focus on a handful of new initiatives and to right-size Zynga’s staffing levels,” Pachter wrote.

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