Thursday, July 26, 2012

Hot Trend: Zynga Inc(ZNGA) Sinks 39%, Facebook Inc(FB) Down 8% % Akamai Technologies(AKAM) Up 22.50%

Zynga Inc(NASDAQ:ZNGA) is experiencing a worst day with a loss of 39% since the company went public in December 2011. Investors are winding their positions and heavy short selling is witnessing in the stock after the online game provider reported dismal quarterly earnings and trimmed its full earnings outlook, stating that users on Facebook Inc(NASDAQ:FB) have been switching more to mobile,  which has slow down its gaming users. The company generated 100% of its revenue from Facebook’s platform. Recently, the company had announced to launch its own platform, but it is still under beta version and is yet to monetize.

Can ZNGA Bounce back After Today’s Fall? Get Trend Analysis

The company just earned a penny on an adjusted basis, lagging analysts’ forecast by 4 cents, while revenue of $332.4 million also missed the Wall Street target of $344.12 million. In fact, the company trimmed its earnings estimate for the year to 4 and 9 cents a share, drastically reduced from its previous guidance of 23 to 29 cents a share. As a result, shares of ZNGA fell another 38% to $3.14 after briefly hitting record low of $2.97. It would really be a tough call to make any investment decision on the stock after today’s plunge. But the trend could be continued and ZNGA may fall further. So hold your breath before the stock stabilizes.

Poor quarterly number from Zynga is also creating fresh tensions for Facebook Inc(NASDAQ:FB), as the company’s 15% of total revenue generated from Zynga’s revenue as a commission on gaming service it provides. As of yesterday, investors and analysts were talking about the ad revenue to be closely watched, now they also need to watch the company’s other revenue, if that comes lower it would really be a tough for FB to hold at current market price and the stock may hit record low. The company is scheduled to report earnings today after hours. Analysts are expecting 12 cents a share on revenue of $1.15 billion. Shares of the company have lost 30% from its $38 IPO price in just two months. So needs to be bit cautious ahead of earnings.

Get Instant Updates on FB's Earnings After Market Close Today, Click here

 On the winning side, Akamai Technologies, Inc.(NASDAQ:AKAM) is clearly a big gainer in today’s session as the company has witnessed lower profit, which came ahead of analysts’ target. The company reported a 8% fall in its second-quarter net income to $44.2 million, or 24 cents per share, from a year ago profit of $47.9 million, or 25 cents per share. On an adjusted basis, the company earned 43 cents a share, ahead of analysts’ target by 6 cents. Revenue during the quarter came in at $331 million, up 20% year over year from $277 million, again topping analysts’ target of $326 million.

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Shares of AKAM were up 22.51% to $34.61.

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