Zynga usage declines, stock drops to record low

Jun 13, 2012
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Zynga usage declines, stock drops to record low

Zynga, known for its popular online games for Facebook, has just seen its shares drop to a record low of $4.98. It's the lowest price since the company first began selling its shares at $10 in its IPO back in December. The drop came after analysts at Cowen & Co. revealed that usage of Zynga's games had declined last month as more players switched over to mobile gaming.

Cowen & Co analyst Doug Creutz wrote in a report that Zynga's daily active usage had dropped 8.2 percent in May. Cruetz believes that more consumers are switching to mobile gaming as it is playble any time and anywhere. He offers a neutral rating on Zynga's shares, estimating the price at $5.55.

Zynga games, such as Farmville, are mostly played through Facebook via the web. Facebook takes a cut of the sales made from virtual goods, while Zynga gets access to Facebook's massive user base.

However, this close relationship with Facebook seems to have done more harm than good lately with the social network's botched IPO. Increased mobile usage is seen as a negative for Facebook because it has yet to figure out how to make money off of mobile users.

[via Washington Post]


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