Zynga Inc (ZNGA) Short Interest Up By Over 9% In December

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Zynga shares witnessed a substantial surge in short interest during the month of December. As of Dec. 15, short interest totaled nearly 70.5 million shares, which is an increase of 9.9% from the Nov. 28 total of about 64.1 million shares. Total short interest amounted to around 9.4% of the float.

Headwinds for Zynga

Zynga investors have not gained much since the company’s IPO in 2011. CEO Don Mattrick could not do much to turn around the company, and the game maker has lost half of its value since his arrival. The company acquired NaturalMotion, but it was in vain, as the high-profile acquisition has failed to lower worries about the company.

At the end of the third quarter, Zynga had 26 million daily active users and 112 million monthly active users. The figure was a decline from the 30 million daily active users and 133 million monthly active users in the third quarter of last year. Revenue dropped 13% year over year to $177 million, and the game maker posted a net loss of $57 million. Its adjusted EBITDA margin came in at 1%, a drop from 5% last year and 8% in the previous quarter.

For the financial year 2014, the company is expected to lose $200 million, as management indicated that over the past few years, the company has lost more than $800 million.

Popular titles fading

Zynga’s top three titles are Farmville 2, Zynga Poker and Hit it Rich. However, the popularity of all three games is declining now, as suggested by their rankings. Payer change (allowed to paid player) for Zynga was just 1.8%, which is a drop from 1.9% in the second quarter and only a minimal change from the 1.6% rate in the previous year’s quarter.

One positive for Zynga was ABPU, which came in at 7.3 cents, an increase from 5.5 cents last year. The rise in ABPU suggests that even though the company is struggling to gain new free players and convert them into paid ones, it is able to generate more cash from its existing client base.

In separate news, director Ellen F. Siminoff offloaded 10,000 shares of Zynga on the open market in a transaction that occurred on Dec. 15. The shares were sold at an average price of $2.51 each, for a total transaction of $25,100, according to a document filed with the SEC.

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