Analysts were hoping the social gaming giant would reach $344 million during the second quarter but only managed to hit $332 million. The maker of Farmville and Words with Friends, Zynga reveals that its share is valued at one cent, missing the 6-cent per share prediction of analysts. That said, the company is not optimistic about the rest of the year.
Zynga attributed the decline on revenue to the fact the millions of Facebook users no longer spend longer time on games like during the heyday of Farmville.
While Zynga’s heat is cooling down, Facebook disclosed a 32% increase in revenue, beating expectations slightly. However, Facebook stocks also fell by about 5% hours after the announcement as investors were apparently not impressed.
Zynga bought OMGPop for a rumored $200 million deal last March. OMGPop was the creator of the game that became an instant hit called Draw Something. It seems the purchase though is not paying off as expected as Draw Something failed to hold on to its fans. Zynga also said that other factors are at play why the company is losing traction including the decline of present web games as Facebook platform becomes ever increasingly challenging, and Draw Something’s reduced expectation.
Rich Greenfield, an analyst from BTIG, said that Zynga’s management is not prepared to the fast transition to mobile, diminishing the confidence of investors for the company.
Another analyst, Sean McGowan, views Zynga’s plight right now as normal for a company that has become so big overnight. McGowan thinks that the company still has a lot of revenue to stage a comeback.
Whatever the truth for Zynga’s situation right now, the slight dip in earnings for the second quarter is not a clear indicator yet if it is over for the company.