Zynga Stock Falls Sharply As Company Sees Decline In Users

2011 was a great year for Social game developer Zynga. The company was producing extremely popular games for the social network Facebook and was growing rapidly. Every move the company made was met with success and the story reached a climax when Zynga went public in December 2011. Investors and analyst were excited by the company and the promise that social gaming held. However all that seems to be old news only six months later, as the stock price for the company has fallen to almost fifty percent of its initial value. The botched Facebook IPO did not help Zynga and other more apparent reasons exist for the steep drop in stock price.

When Zynga went public it had stated that 92% of the money it made was through Facebook. This over dependence on Facebook was something that the company itself was aware of and was looking to change. If, for some reason, users started to move away from Facebook in particular or social networks in general then Zynga would be in trouble. That seems to be what has happened as most users move away from accessing Facebook from their computers and start using their mobile devices and tablets. The monetization of the mobile user is something that Facebook is still working on and this has made Zynga vulnerable.

Recent data shows that Zynga lost many users of their previously popular games to mobile game app like the ones iPhone’s App Store offers. At the end of last year, Zynga owned games that had the top most daily users on Facebook. The picture has changed dramatically and three of Zynga’s games have dropped from the top ten. For example, the extremely popular Cityville game had 10,110,000 daily users in December of 2011 and by June 2012 the numbers had fallen to 4,600,000. This trend is apparent in most of the other games too.

Recent reports also indicate the users are moving away from social gaming in general and have opted for games on their mobile devices. Zynga will need to create a presence on people’s smartphones if it wishes to stay a high flier.

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