Why Zynga's Stock (Nasdaq: ZNGA) Fell Off a Cliff

Shawshank, VA 6/13/12 (StreetBeat) -- Zynga's (Nasdaq:ZNGA) stock has fallen off a cliff. It's off 11.5 percent at last check, bringing the social gamingcompany down nearly 50 percent year to date. What happened?

It seems people are choosing more mobile instead of social games.

Cowen and Company issued a report titled "Facebook Gaming in Accelerating User Tailspin," which highlights the fact that Zynga's social gaming daily active users declined by 8.2 percent in May.

Cowen analyst Doug Creutz points to the fact that nearly all of the company's major titles posted "significant" month over month declines in daily active users, and that May marked the second consecutive significant month over month drop.

Despite the launch of hit games, like 'Bubble Safari,' Zynga is continuing its decline in total daily active users. Creutz says it looks like casual gamers are simply moving away from the Facebook (Nasdaq:FB) platform to games on their smartphones and tablets-the quality is high and they have the advantage of being able to play them anytime, anywhere.

But Zynga's drop may be unwarranted-Creutz has a "Neutral" rating on Zynga shares because of Zynga's mobile game business. He points out that Zynga's "advantages of scale and cross-promotion" are limited to the Facebook platform, though Zynga is "aggressively pursuing mobile game development."

In fact, just today Zynga is taking its hit "Draw Something" mobile app global, by launching it in 12 new languages, and partnering with Enrique Iglesias and Jennifer Lopez to promote the game as they start their North American Tour.

And Wedbush's Michael Pachter tells me that it's more important to focus on the number of gamers who are paying to play. He says it makes sense that user numbers for a game like Draw Something would drop off - people who aren't good at drawing will simply stop playing. But the people who do stick around are likely to pay more to improve their gaming experience.

But today's slide follows the stock dropping yesterday on what appeared to be a combination of concern about Facebook's slowing growth in April and lower daily active user numbers.

The big question-can Facebook make its gaming experience on the smartphone good enough that gamers will be able to have all the advantages of the mobile gaming experience without having to leave Facebook's platform. Once again, Facebook's future hinges on its mobile experience and expansion.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

StreetBeat Disclaimer

Distributed by Viestly

Why Zynga's Stock (Nasdaq: ZNGA) Fell Off a Cliff

Shawshank, VA 6/13/12 (StreetBeat) -- Zynga's (Nasdaq:ZNGA) stock has fallen off a cliff. It's off 11.5 percent at last check, bringing the social gamingcompany down nearly 50 percent year to date. What happened?

It seems people are choosing more mobile instead of social games.

Cowen and Company issued a report titled "Facebook Gaming in Accelerating User Tailspin," which highlights the fact that Zynga's social gaming daily active users declined by 8.2 percent in May.

Cowen analyst Doug Creutz points to the fact that nearly all of the company's major titles posted "significant" month over month declines in daily active users, and that May marked the second consecutive significant month over month drop.

Despite the launch of hit games, like 'Bubble Safari,' Zynga is continuing its decline in total daily active users. Creutz says it looks like casual gamers are simply moving away from the Facebook (Nasdaq:FB) platform to games on their smartphones and tablets-the quality is high and they have the advantage of being able to play them anytime, anywhere.

But Zynga's drop may be unwarranted-Creutz has a "Neutral" rating on Zynga shares because of Zynga's mobile game business. He points out that Zynga's "advantages of scale and cross-promotion" are limited to the Facebook platform, though Zynga is "aggressively pursuing mobile game development."

In fact, just today Zynga is taking its hit "Draw Something" mobile app global, by launching it in 12 new languages, and partnering with Enrique Iglesias and Jennifer Lopez to promote the game as they start their North American Tour.

And Wedbush's Michael Pachter tells me that it's more important to focus on the number of gamers who are paying to play. He says it makes sense that user numbers for a game like Draw Something would drop off - people who aren't good at drawing will simply stop playing. But the people who do stick around are likely to pay more to improve their gaming experience.

But today's slide follows the stock dropping yesterday on what appeared to be a combination of concern about Facebook's slowing growth in April and lower daily active user numbers.

The big question-can Facebook make its gaming experience on the smartphone good enough that gamers will be able to have all the advantages of the mobile gaming experience without having to leave Facebook's platform. Once again, Facebook's future hinges on its mobile experience and expansion.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

StreetBeat Disclaimer

Distributed by Viestly

Zynga (Nasdaq: ZNGA) Users Decline as More Facebook (Nasdaq: FB) Usage Goes Mobile

Orlando, FL 6/12/12 (StreetBeat) -- Shares of online games provider Zynga (Nasdaq:ZNGA) are down 55 cents, almost 10%, at $5 after Cowen & Co.’s Doug Creutz this morning reiterated a Neutral rating on the shares, writing that daily average unique users for its games, such as “Words with Friends,” declined by 4.8 million to 54.2 million between May 1st and June 8th, a sign, he thinks, that usage is declining for social games “across the board” as mobile gaming continues to rise.

Creutz lays out the relevant stats for Zynga:

Zynga saw significant declines in May from nearly all of its existing major games: Words With Friends had its third consecutive down month, losing 600K DAUs to 6.4MM (-8.6% m/m); CityVille lost 1.7MM DAUs to 4.5MM (-27.4% m/m); CastleVille lost 1.0MM DAUs to 4.4MM (-18.5% m/m); Hidden Chronicles dropped 1.8MM DAUs to 3.3MM (-35.3% m/m); FarmVille lost 600K DAUs to 4.0MM (-13.0% m/m); Zynga Slingo lost 600K DAUs to 3.1MM (-16.2% m/m); and Empires & Allies lost 400K DAUs to 1.3MM (-23.5% m/m), falling out of the top 20. Texas Holdem Poker only lost 100K DAUs to 6.8MM (-1.4% m/m). The lone bright spot for Zynga was the launch of Bubble Safari, which rocketed to the #3 slot by adding 5.7MM DAUs in four weeks. However, given the inverse-V trajectories of other recent Zynga launches, we are only moderately impressed by the early performance of the title.

Creutz suggests Zynga is being hit by the shift in Facebook (Nasdaq:FB) usage from the desktop to mobile phones:

We believe that mobile devices may be siphoning off an accelerating number of gamers from Facebook. Facebook itself is increasingly being accessed by mobile devices, however it is not possible to play Facebook-native apps through Facebook on a smartphone. We believe that over the last two months, trends in the casual digital gaming space have swung decisively towards mobile and away from social, at least in Western markets.

Facebook shares today are up 39 cents, or 1.4%, at $27.40.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

StreetBeat Disclaimer

Distributed by Viestly

Facebook Opens at $42.05, GIves Up All Gains at $38.01

Atlanta, GA 5/18/12 (StreetBeat) -- Shares of Facebook (Nasdaq: FB) are being quoted at $45 on Nasdaq before the open of trading at 11 am, well above the $38 offer price.

Actually, the indication has bounced around a little, retreating from $45 at first to $43 and then $42. Stand by.

Sterne Agee’s Arvind Bhatia, who has a Buy rating on Facebook’s shares, and a $46 target, tells me this morning “The price seems like a fair price,” with respect to the $38 offer.

“They could have potentially gone higher given the demand that we’re seeing, but they left some room for upside.”

Now the open has been delayed till 11:10, apparently. The indication has dropped to $42. Playing hard to get. Wedding jitters?

The average price target of 8 analysts surveyed by FactSet is $41.50.

A little light reading while yo wait for a quote: the most recent version of the prospectus.

Bloomberg TV is reporting Nasdaq says it is experiencing delays in opening trading.

The average Facebook estimate for this year is $5.076 billion in revenue and 59 cents in non-GAAP EPS, according to those eight analysts I mentioned. That would be 37% revenue growth and 36% EPS growth.

Headlines are coming from Dow Jones saying traders are “experiencing problems, changing, canceling orders.”

We have a winner: The stock has opened at $42.05, now at $42.49 and rising. That’s an 8% gain, so far. Now backing off to $41 and change.

Down to $40.23 … $40.00. Low so far, according to FactSet, is $38.20.

Video game purveyor Zynga (Nasdaq: ZNGA), which has made much off its money off the Facebook game “Farmville,” was halted by Nasdaq because of a circuit breaker. The stock is down $1.10, or 13%, at $7.17.

The stock’s broken through $40 and is $39.06, a 3% rise.

Sterne Agee’s Bhatia remarks, “I’m a little surprise we’re not seeing a bigger pop. I think it signals the pricing was fair, and from my standpoint it makes it a little easier .. it’s difficult for an analyst if there’s too much froth. I’m almost glad to see the stock not trade in an irrational matter.”

Now down to $38.07, up just pennies! Actually, it went down to $38.00, and is hovering at the $38.01 level.

Please contact www.thestreetbeat.com for interest in our latest investor relations platform the “CEO Interview Series” with its host Steve Kanaval. The package includes a one-on-one interview with a seasoned industry professional; published segment to our web site with embedded audio/video file; and a compressed file that can be easily e-mailed out to your current and/or potential investors. Please e-mail bflautt@gmail.com or call (662) 392-0740 for pricing and scheduling.

StreetBeat Disclaimer

Distributed by Viestly

Zynga IPO Values Company as High as $9.04 Billion

Tallahassee, FL 12/2/11 (StreetBeat) -- Zynga Inc plans to sell an 11.1 percent stake in a scaled-back initial public offering that would value the Facebook game maker at as much as $9 billion on a fully diluted basis. The leading social games maker plans to sell 100 million new shares at between $8.50 and $10 each, according to a U.S. regulatory filing on Friday. At the midpoint price, the IPO could raise $925 million, which would make it the largest from a U.S. Internet company since Google Inc (Nasdaq:GOOG) raised $1.7 billion in 2004.

Five-year-old Zynga made its name on viral games such as "FarmVille," among the most popular on the Facebook social network. While Zynga's games are free to play, the company makes money from selling virtual items -- such as tractors and weapons -- that players then use.

Based on a fully diluted share count of 904 million, which includes existing shares and stock options, the IPO price values Zynga at $7.7 billion to $9.04 billion. In a filing two weeks ago, the company said a third-party analysis had valued it at $14.05 billion. While the valuation has been cut, Zynga would still be among the largest publicly traded U.S. game developers after it debuts on Nasdaq under the "ZNGA" symbol.

Video game developer Activision Blizzard Inc (Nasdaq:ATVI) currently has the industry's highest market value of $14.2 billion, followed by Electronic Arts Inc (Nasdaq:ERTS) at $7.7 billion.

Zynga's debut will follow IPOs this year from Groupon Inc (Nasdaq:GRPN) and LinkedIn Corp (NYSE:LNKD), which helped revive a market that had sputtered in recent years. Facebook is gearing up to go public next year.

Mark Pincus, a serial entrepreneur before he founded Zynga, will hold a class of shares with 70 times more voting power than the regular stock that will be sold in the offering.

Google, one of the early investors in Zynga, will be offering about 1.7 million shares, according to a regulatory filing. Other companies selling shares include Institutional Venture Partners and Union Square Ventures. Deep-pocketed rivals from Walt Disney Co (NYSE:DIS) to Electronic Arts are starting to muscle in on Zynga's turf.

The company said its IPO represented 14.3 percent of 699 million common shares, excluding restricted stock.

StreetBeat Disclaimer

Distributed by Viestly

Zynga to employees: Give back our stock or you'll be fired

Palm Beach, FL 11/11/11 (StreetBeat) --Attracting top employees can be difficult for cash-strapped startups. So, in many cases, they give out company stock to supplement salaries that employees might feel is below-market. Zynga followed that strategy. But now the CityVille and FarmVille maker apparently wishes it hadn't, according to a new report.

Citing industry sources, The Wall Street Journal reported today that Zynga CEO Mark Pincus, along with his top executives, decided last year as they were preparing for an initial public offering (IPO) that they had given out too much stock to employees. But rather than accept that reality, the executives reportedly tried a different tactic: demand employees give back not-yet-vested stock or face termination.

In order to determine which employees would be asked to give stock back, Pincus and his executives tried to pinpoint workers whose contributions to Zynga--in the execs' eyes--didn't necessarily justify the potential cash windfall they could receive when the company went public, the Journal claims. One Journal source said that Zynga executives were especially concerned with not creating a "Google chef" scenario.

That reference relates to Google's 2004 IPO when one of the company's chefs, who was hired in the firm's early days, walked away with $20 million worth of stock after the shares went public.

After finding people to target, the Journal's sources say, Pincus offered his ultimatum. However, as one might expect, he faced some anger from employees who didn't believe they should be required to give back the stock. The Journal cited two employees--one who has left Zynga and another that still works with the company--who hired attorneys to reach a settlement that saw them give up some, but not all, of the unvested shares.
Although Zynga's decision might be met with some criticism, the firm's executives reportedly justified their strategy by saying it was best for the company. With the unvested shares, the executives believed they could attract more top talent with the promise of stock.

Speaking of stock, the public might soon have a chance to own part of the social-gaming company. Earlier this month, Bloomberg reported that Zynga was planning to go public after Thanksgiving. The company is expected to raise up to $1 billion in an IPO.

StreetBeat Disclaimer

Distributed by Viestly

'Farmville' Makers Putting Stock in Virtual Goods

Tallahassee, FL 11/7/11 (StreetBeat) -- Zynga is a company that makes money by selling nothing. Or, to be fair, by selling imaginary things, like tractors that plow farms on Facebook.

A "virtual good" is the term of art for an industry that minted $9 billion last year alone. Zynga is America's first virtual goods company to file an initial public offering. The IPO is expected to go through before Thanksgiving and will test whether the company's modern day alchemy — turning virtual goods into real money — is a game-changer for the gaming industry.

Misiek Piskorski is a professor at Harvard Business School. His job: to play and study popular online games like Cityville by Zynga. "I forgot to come back to my city, so some of my plants have withered away," Piskorski explains as he plays the game on Facebook. "My friends actually have been kind enough to come back and unwither some of my plants." Piskorski harvests his virtual crop and sells to a local grocer. Not for cash — at least, not the green, folding type. His money, like his goods, is virtual.

But for 5 percent of Zynga's 200 million monthly users, that's not the case. They buy a special currency to get ahead in the game, without relying on friends for help. Or, Piskorski explains, they use the virtual money to buy luxury condos, yachts — goods that don't have a use per se, but are "just really beautiful to look at." Zynga raked in $1 billion this last year, in sales of virtual tractors that plow virtual farms, or avatars that embody gamers' Web personas.

Tierra Cates, 19, sells Zynga currency at a CVS in Washington, D.C. She points to a shelf lined with pre-paid cards for Starbucks, Loews theaters and other businesses. One card has a goofy duck waddling up a pasture. It's for Farmville, Zynga's original mega-hit.
"I've seen kids come in with their parents and cry for these cards," Cates says. "My dad does it, too. And I think it's like, ridiculous."

Traditional video games make you pay up front. Zynga inverted the model: play for free. And, once you're hooked, pay to get ahead.

Revenue from virtual goods has helped Zynga kick the addiction to ad revenue — the curse of online businesses. The ads it does feature enhance the game. American Express sponsors blue virtual windmills that help grow crops. Lady Gaga sexed up the scene by releasing her album Born This Way on Gagaville.

Zynga officials declined an interview because, they said, they're in a "quiet period" required by the Securities and Exchange Commission before the IPO.

Eric Ries, author of The New York Times bestseller The Lean Start Up, is a Zynga fan. To be more precise, he's a defender of virtual goods. For skeptics who think virtual goods aren't real, he has this retort: "I don't think that you're using the word 'real' correctly." Fashionistas spend $2,000 on a Prada handbag. Gamers spend $20 on an imaginary tractor or avatar or sword. It's the same, Ries says, except "the virtual objects are all tied to the specific environment in which they were developed." A sword purchased in the game World of Warcraft can't be taken into the real world, or into other games.
Sam Hamadeh, CEO of PrivCo, sifts through the financial data of private corporations and isn't so sure that virtual goods sales are anything more than a fad. Yet he estimates Zynga is worth $5 billion. Others say $20 billion.

The value comes down to whether competitors — traditional gaming companies like Electronic Arts or Activision — buy into the business model, Hamadah says. "Will Disney start offering games with their characters, in the same model?"

StreetBeat Disclaimer

Distributed by Viestly