Zynga Inc (ZNGA) Posts Loss In Q2, Shares Dive

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Zynga Inc (ZNGA) Posts Loss In Q2, Shares Dive

Zynga Inc (NASDAQ:ZNGA) released its earnings numbers for the three months ending June 30 this afternoon after the market closed. The company showed a loss per share of $1 cent for the second quarter of 2013 on revenue of $231 million. On today’s market, stock in Zynga Inc (NASDAQ:ZNGA) trended strongly upward and finished the day at $3.49 per share.

Zynga Inc (ZNGA) Posts Loss In Q2, Shares Dive

In the same three months of 2012 the social gaming company took in revenue of $332 million and turned it into earnings per share of 1 cent. Zynga Inc (NASDAQ:ZNGA) was expected to show a loss per share of 4 cents in this afternoon’s earnings report, while revenue was expected to come in at $224 million.

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Gambling on Zynga’s future

Despite the worsening numbers on both revenue and earnings so far in 2013, investors are in love with Zynga Inc (NASDAQ:ZNGA). The firm’s shares have appreciated by around 50% so far in 2013, taking into account today’s trading. The reason for the optimism around the firm’s stock is, despite its protestations, that Zynga Inc (NASDAQ:ZNGA) is becoming a casino.

In the last six months Zynga Inc (NASDAQ:ZNGA) has been laying the groundwork for its transformation into a company that relies mainly on gambling revenue. The company released a suite of real money gambling games in the United Kingdom that have show some traction, while at the same time the company’s social gaming revenue is stable enough for it to make the transition without needing to rely on massive debt, or other problematic solutions.

There is no telling how successful Zynga Inc (NASDAQ:ZNGA) gambling could be in the United States. If the practice is legalized on a wide scale there will be serious competition. Zynga is leveraging its old friend Facebook Inc (NASDAQ:FB) in order to give it a competitive advantage in the field.

Facebook is Zynga’s last hope

Gambling is a difficult problem for Facebook Inc (NASDAQ:FB). The company needs to maintain a family-friendly image in order to prevent parents from banning their kids from the site. That brand image is necessary to keep the company’s business stable in the years ahead. Gambling revenue is tempting, however, and Facebook Inc (NASDAQ:FB) could do with some diversification.

Zynga Inc (NASDAQ:ZNGA) has already launched gambling games for Facebook in the United Kingdom. If the take up in that country is successful, and the Facebook Inc (NASDAQ:FB) brand is not tarnished, Zynga Inc (NASDAQ:ZNGA) might be saved. If that doesn’t work out, the company will face hard times in the coming years.

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