Zynga Shares Fall Almost 20 Percent In After-Hours Trading
Zynga has not had the best of luck recently. It’s pretty bad when the best product you have available is a board game based on Words with Friends from the folks who make Scrabble. Not to mention the company has been bleeding talent left and right. The company’s share price has been slowly dropping, but it just fell off a cliff last night.
TechCrunch reports that Zynga’s shares hit an all time low last night in after-hours trading. The company ended trading yesterday with a share price of $2.82, but that share price fell to $2.29 in after-hours trading. That’s a drop of almost 20 percent.
So what is Zynga going to do about this? Nobody really knows. CEO Mark Pincus has acknowledged that the company isn’t doing so hot, but that’s about it. Executives and other higher ups have been leaving the company in droves, and Zynga can’t afford to lose any more talent as it pushes into the far more lucrative world of mobile games.
This isn’t the first problem that Zynga has had to deal with. The company is currently facing a probe into allegations of insider trading after Pincus and other top executives offloaded millions of dollars worth of stock right before the company’s share price crashed. The social games maker also faces a lawsuit from Electronic Arts over copyright infringement claims. All of these events are forming a perfect storm that Zynga might not be able to navigate out of.
Zynga will release its Q3 earnings later this month on October 24. We’ll find out then if the company has any plans to appease its investors who are undoubtedly looking for blood. I don’t think Pincus will step down, but he will have to prove that he has what it takes to steer the company through this challenging time for the social games industry.