Thursday, July 26, 2012

Zynga Inc(NASDAQ:ZNGA) Set To Post Biggest Intra Day Loss – ZNGA, Facebook, GRPN, GLUU

The shares of Zynga Inc(NASDAQ:ZNGA) are all set to show gap down session on Thursday after spooking investors by reporting much lower than anticipated second-quarter earnings. Moreover, the recent fall in users and delay in games launch has forced the online gaming company to trim its earnings and revenue outlook for the full year drastically.

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Shares of the company had been one of the worst performers with a loss of 70% in the past three months on continuous worries about a sudden fall in users . As we all know, ZNGA is not an independent company when it comes to generate revenue as the it wholly (100%) depends on Facebook Inc(NASDAQ:FB), which lets Zynga to offer their game on the company’s platform. However, recent data suggest that more and more users have been switching from desktop usage to mobile usage, which restricts the number of game lovers to play Zynga games. Moreover, due to increased number of offline games, users have become found of ignoring the company’s online game.

The company which is popular for games like "CityVille" and "FarmVille" said that it lost $22.8 million, or 3 cents  a share in the latest quarter, reversing a year ago profits of $1.4 million. On an adjusted basis, the company would have earned a penny, well below analysts’ target of 5 cents a share. Revenue came in at $332 million, up 19% year over year, while missing analysts’ estimates of $342.8 million.

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For the full year, the company now projects to earn 4-9 cents a share on revenue range of $1.15 billion-to-$1.23 billion, well below from its prior forecast of 23-29 cents per share on revenue range of $1.43 billion-to-$1.5 billion.

Shares of ZNGA plunged 40% to $3.20 in after-market activity on Wednesday.  Shares of the company have lost 70% from its IPO price of $10, while its down 80% from its life time high of $15.91.

Not only, ZNGA, but shares of other social networking companies pulled back including Facebook Inc(NASDAQ:FB). Facebook derives 15% of its revenue of Zynga and a weakness on Zynga’s earnings could hurt Facebook’s earnings. So it would be interesting to see how Facebook spook investors in its maiden earnings after going public. Shares of FB slumped 8% in after hours on Wednesday.

Glu Mobile Inc.(NASDAQ:GLUU) lost 3.76% and Groupon Inc(NASDAQ:GRPN) slid 4.70%. 

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