Tough Times for Zynga
Zynga have just revised down its fiscal year guidance and as a result its shares have dropped to around $2.40 from an IPO of $10.
The reason for the revision is Zynga’s inability to attract new players and maintain the interest of existing ones.
This is partially because Facebook has changed its discovery algorithm so that it now favours new games rather than existing games.
At the same time there have been rumours that Zynga’s CEO, Mark Pincus, may make the company private.
However, this seems unlikely; analysts have warned that were this to happen now, it would make Zynga’s IPO look like a scam.
Furthermore, it seems unlikely that Pincus would do this at a time when stock prices are so low and the firm has no clear forward direction or profit making strategy.
At present Zynga’s hopes are riding on FarmVille 2 and it remains to be seen if it will be as successful as its predecessor.
At present there are more than 7.5 million players logging in daily and it is still growing. However, the original, FarmVille, now has fewer than 3 million daily players and CityVille fewer than 2.5 million.
Zynga desperately need to find a way forward in order to turn the company around.