Zynga Inc Defaults On Nasdaq Compliance After Directors Exit

zynga earnings

Zynga Inc (NASDAQ:ZNGA), in a regulatory filing on Friday, reported that after the departure of the two independent directors from the social gaming company’s board on June 11, the firm is no longer in compliance with Nasdaq listing rules, according to a report from Reuters. Per the Nasdaq requirements, the board of directors of a member company must have a majority of independent directors.

Deadline of July 27

In the filing, the game maker said it would soon provide details to the exchange on a plan of how it intends to return to compliance. The firm has a deadline of July 27 to file the plan. In April, Zynga Inc (NASDAQ:ZNGA) reported that LinkedIn co-founder Reid Hoffman (a director since 2008) and DreamWorks’ CEO Jeffrey Katzenberg (a director since 2011) will not be returning to the board.

Earlier this month, a report from Venture Beat revealed that three top executives have left the game maker; including Words With Friends head Travis Boatman, head of acquisitions Terence Fung, and former head of the company’s Ville franchise Steve Chiang. The exit of the key executives highlights the tough decisions taken by CEO Don Mattrick to reorganize and turnaround the struggling game maker.

Short interest dropping in Zynga

Zynga Inc (NASDAQ:ZNGA) witnessed a sharp decline in short interest in the month of May. According to a report from AnalystRatingsNetwork.com, short selling totaled 58,465,116 shares as of May 30th, which is decline of 7.6% from the May 15th total of 63,269,401 shares. Around 8.3% of the company’s float is currently sold short.

Sine the past year or so, the shares of the social gaming company have been volatile. The stock is down around 44% over the last three months, while year to date shares are down over 16%. At a recent Bank of America Merrill Lynch technology conference, CEO Don Mattrick acknowledged the struggle and said that the company is “nowhere near where we should be.”

However, analysts are hopeful that Zynga Inc (NASDAQ:ZNGA) will rebound from the current lows to perform well in both the both medium and long run. In a report issued last week, UBS analysts said they were “constructive over both the medium and longer term.”

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

6 Comments on "Zynga Inc Defaults On Nasdaq Compliance After Directors Exit"

  1. Zynga could pull itself out of it’s current situation if they would use their brains. Good customer service is one way, another would be not forcing it’s members to pay to succeed in their games because they make them impossible to achieve. They made a smart move with Cafe World by offering a VIP status, so they could make money and players would have great advantages by doing so. It was a win win situation. Prior to that however they upset the apple cart by throwing numerous tasks and upsetting it’s members causing many to quit the game. I do believe if they so choose to bounce back, instead of getting rid of games and upsetting more apple carts and quite possibly loosing all off it’s current clientell, should focus on thinking ouutside the box and offer their games VIP statuses where zynga has a recurring income and players have recurring benefits to that. Being an avid player of Cafe World and finding out they are ending the game, upset me enough to not want to play any Zynga games. In many years of retail, I know this, customers will pay more for something if they get great customer service. This holds true in any retail situation. Keep the customer happy.

  2. Not a week or two ago, the “financial advisors” on here were telling people to buy up Zynga stock… Crooks…

  3. The problem with Zynga is they insist on constantly bombarding players with an ever increasing set of features that they don’t have room for, without fixing the tendencies of their games to crash

  4. Mobile gaming is like a drug addict: always chasing that next high. It’s that fickle quality why so many mobile companies cash out after their one-hit.

  5. The potential is there, just whether or not they can capitalize on it is a separate issue. This non compliance issue is about the composition of the board. Thats a relatively easy fix.

    The business model isn’t broken though. Mobile games are expected to generate over $18B in 2014, which is twice the amount of money than all projected console games sold which is expected to be $9B this year.

  6. I think Zynga is just toast. All the old execs are bailing out so they can dump their stock. The new management is just being paid lots of cash to helm the Titanic before it eventually sinks.

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