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Zynga in trouble as gamers turn away from Facebook

updated 03:30 pm EDT, Wed June 13, 2012

Company's stocks plummet as Facebook games may have peaked

Social gaming company Zynga has hit a rough patch of late, encountering a steady drop in share prices amid concerns that Facebook may have passed its prime as a gaming platform. Reuters reports that Zynga's shares declined by more than 10 percent on Tuesday, triggering a "circuit breaker" that automatically halted further trades. The company's troubles are said to stem from a decline in social gaming as the novelty of the sector begins to wear off.

The stock falloff comes in the wake of an announcement from analysts at Cowen & Co positing that interest in Facebook-based gaming might have peaked. Other reports suggest the sector will see lower growth and possibly declines as gamers move more toward mobile entertainment.

Zynga's close ties to Facebook have been viewed as both a boon and an impediment for the gaming company. Facebook provides the platform that has allowed Zynga to reach the heights it has attained to date, but the social network's own troubles are perceived to have rippled out and negatively affected Zynga. The game company has been trying to branch out on its own--starting up its own platform and partnering with AT&T--but the bulk of its revenue still comes from Facebook usage.

Despite Tuesday's precipitous stock slide, Zynga's shares actually rebounded on Wednesday, though they still remain well below the $10 price seen at the company's initial public offering. Some analysts have begun pushing back against the negative predictions for Zynga, saying that the company's increased focus on mobile gaming may be enough to reverse its fortunes.



By Electronista Staff
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  1. facebook_Lila

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  1. facebook_Rob

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    Joined: Jun 2012

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    Flipping The Coin

    I think the decline in social network gaming isn't just due to loss of interest, but coupled with the fact that more and more companies are blocking social networking sites Facebook in their offices, so more people are finding themselves without the time to play such games. I admit that I spent my share of company time harvesting in Farmville....

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