Zynga Shares Fall 41 Percent After Mostly Positive Q2 Results
Social game giant Zynga announced their Q2 results yesterday and things were looking pretty good. We could finally put their recent stock stumbles behind us and look forward to a new era of profitability. Unfortunately, that was not the case as the company’s stock took its biggest plunge since the developer went public.
Let’s focus on the good news first. Zynga’s Q2 revenue was at $322 million, up 19 percent year-over-year. The company’s Q2 bookings were also looking pretty splendid at $302 million, or up 10 percent year-over-year. The company also saw increases in daily active users, monthly active users and monthly unique users. All in all, it was a decent quarter two for Zynga.
“The company achieved some significant milestones in the quarter including the launch of Bubble Safari, which is now the number one arcade game on Facebook, and the launch of The Ville, now the number two game behind Zynga Poker. Our advertising business continued to show strong growth with revenue up 170% year-over-year. Our games reached record audiences, achieving over 300 million monthly active users. We grew our mobile footprint five-fold in the year to 33 million daily active users making Zynga the largest mobile gaming network,” said Mark Pincus CEO and Founder, Zynga. “We also faced new short-term challenges which led to a sequential decline in bookings. Despite this, we’re optimistic about the long-term growth prospects on mobile where we have a window of opportunity to drive the same kind of social gaming revolution that we enabled on the web.”
Here’s where the bad news comes in. At the end of their earnings release, Zynga announced that they were lowering their outlook for the rest of 2012. The company blamed it on “delays in launching new games, a faster decline in existing games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something.”
In after hours trading, Zynga’s shares plummeted by 41 percent to around $2.99. Zynga’s shares took a similar beating back in May when Facebook went public. The company closed at $5.08 last night so we’ll see where they stand when the market opens this morning.
While the company got their start on Facebook, they are definitely moving away from the platform. During that move, expect to see Zynga’s stock slide around a little bit. Once they get a solid footing in the mobile market and establish a greater presence at Zynga.com, they will hopefully regain their fortune.