Zynga Inc (NASDAQ:ZNGA) announced a significant layoff and lowered its guidance this week, sending the company’s stock into a downward spiral. Now All Things D’s Kara Swisher says investors see the company as worth less than $750 million.
Zynga’s Decline By The Numbers
Shares of Zynga Inc (NASDAQ:ZNGA) fell 12 percent on Monday after the announcement, which brought its market value down to $2.34 billion. As Swisher notes, that’s far below the expectations of investors when the company went public. Since its 2011 initial public offering, the value of the company’s shares have fallen almost 70 percent.
Currently Zynga has 1.6 billion in cash and marketable securities, although Swisher says investors consider it to be worth less than $750 million. As she puts it, that’s $350 million less than Yahoo! Inc (NASDAQ:YHOO) doled out for Tumblr, which reports revenue that’s far below that of Zynga.
The Big Problem For Zynga
Currently Zynga Inc (NASDAQ:ZNGA) is facing the same problem other technology-related companies are facing: the shift to mobile. Currently mobile is monetizing less robustly for the company compared to its web games.
According to Swisher, there’s now some debate about what will happen to the gaming company as its value continues falling. Options might include taking the company private or possibly even an acquisition.
Her sources don’t think Zynga Inc (NASDAQ:ZNGA)’s largest owners will want to do anything dramatic because of its current position. One source told her that the eventual fate of the company depends largely on whether it will be able to turn things around. At this point, things just don’t look good.
Dependence On Gambling
Zynga Inc (NASDAQ:ZNGA) has been depending on finding success in online gambling since it was legalized in a few states. However, thus far online gambling bookings aren’t showing any signs of life. Bank of America Merrill Lynch analysts lowered their price objective for the stock because of the reduced poker bookings.