Your Farmville is Dying, Zynga Not Transitioning Well to Mobile, Stock Slides
"The third quarter of 2012 continued to be challenging and, while many of our games performed to plan, as a whole we did not execute to our satisfaction," said Mark Pincus, CEO and Founder, Zynga. "We're addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities."
After debuting at $10 per share, Zynga's stock now trades for $2.46, which still equates to a $1.87 billion market capitalization. That's up slightly from before the weekend when Zynga's stock was trading at $2.21 per share, down more than three-quarters off its IPO price.
One of the challenges Zynga CEO Mark Pincus has faced is losing talented staff members. According to Reuters, two creators of the highly popular Words with Friends title left Zynga on Friday, which followed an exodus of "a dozen key employees" in the past six months. Investment firms see the loss of employees as a sign of weakness for a company trying to transition to mobile.
"The departures underscore our skepticism about ZNGA and its ability to address the challenges it faces as it pivots towards mobile and its in-house gaming platforms," Brian Pitz from Jefferies & Co wrote in a research note.