Zynga Inc (NASDAQ:ZNGA)’s social gaming business is not in a good shape, but there are limits to how long the shares can retreat on the back of declining revenues, says a report from Seeking Alpha by George Kesarios. The social game maker has already abandoned the plans for real money gaming, and now it has relatively little to offer to investors. The stock has been losing its sheen over the past several quarters and is now trading at new lows with little apparent upside in the future.

Zynga Earnings

What if revenue grows or declines for Zynga?

Revenue growth is the most important factor to keep the company alive in the gaming market. In most of the cases, making money takes a backseat as long as the company is posting increased revenues quarter over quarter, according to Kesarios. Even after the acquisition on NaturalMotion, Zynga Inc (NASDAQ:ZNGA) failed to boost revenue, a critical metric that has been going south for the game maker.

However, Kesarios says that revenue growth can be trumped when it comes to a speculation scenario. Even though Zynga Inc’s revenue is declining gradually, the company is still worth something. Making the statement clear, Kesarios explains, “Even if Zynga’s revenue fell to $20 million per quarter, but it managed not to lose money (as it is currently not), there are limits to how low this stock can go.”

Zynga, a speculative candidate

If Zynga Inc (NASDAQ:ZNGA) takes a dip of another 20%, then it might become a speculative stock for investors. The shares of the company have already shed much of their value. After such a poor performance, it some cases the management comes up with a new idea that may excite investors to put their money in the stock speculating that it will rally.

Kesarios will continue to think Zynga as a “dying business” until the company‘s revenue is stabilized. The author is totally bearish on the game maker, saying he “cannot think of any reason (yet) to buy Zynga even at these depressed levels.” However, if the stock falls another 20%, it becomes a speculation candidate, and then even if the revenues decline “there are limits to how low the stock can go based on its current book value.”