Shares of game-maker Zynga Inc (NASDAQ:ZNGA), extended losses on Thursday, the stock price plunging nearly 40 percent, with analysts downgrading the stock on uncertainty over its continued profitability.
On Wednesday the company had turned in a poor performance and holding out little prospects of an immediate recovery in the near future. It cut its full-year guidance after reporting a loss and revenue below expectations. Analyst at Goldman Sachs lowered its investment rating on the stock to Neutral from Buy.
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The maker of the popular Farmville game, which relies on Facebook users, has been facing problems recently with the No. 1 social network’s changes to its site making it difficult for users to search for existing games. The new format directs subscribers to newer games and away from older ones such as Farmville, which contributes about 15 percent to Facebook’s revenues.
Analysts however feel that it is not so much to do with Facebook’s changes as a shift in consumer preferences to mobile gaming from PC games. Cowen maintained its Neutral rating on the stock while Baird trimmed its price target to $6 from $13, while maintaining its Outperform rating.
Zynga's stock fell $1.90, or 37.5 percent, to close at $3.18 Thursday, the lowest since Zynga went public in December and down nearly 70 from its IPO price of $10.