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Zynga shares fall following revenue drop

Article By: ,  Financial Analyst
February 13, 2015 1:26 PM

Online game maker Zynga reported a significant drop in its share price following a widening of its losses.

The company, which has created games such as Farmville, saw a ten per cent drop in after-hours trading on Thursday (February 12th). It declined throughout the evening and as of 04:00 ET on Friday it stood at 2.28. The significant drop was attributed to a $45 million (£29 million) loss in the fourth quarter.

Zynga missed its targets and has already started its scaling back process by announcing that it would be closing its China studio, with the loss of 71 jobs. The company has struggled to attract new users to its games and releases such as "New Word with Friends" have failed to capture the imagination of the public.

The company has not been helped by traffic from ally Facebook falling significantly as consumers move to mobile games. Despite the disappointing figures, Zynga chief executive officer Don Mattrick was still in a positive mood.

In a statement, Mr Mattrick said: "2014 was a year of progress for Zynga – we came together as one team and applied more discipline and rigor to our business.

"In the fourth quarter, we increased mobile bookings to 60 per cent of our total bookings mix, expanded our mobile audience with monthly mobile consumers up 87 per cent year over year, and grew our core franchise bookings by 35 per cent year over year."

Increased competition

Another factor in Zynga's slump in performance is the emergence of competitors. Finnish mobile game development company Supercell has been growing in popularity and in 2012 launched a game to rival Zynga's flagship game Farmville – Hay Day.

This version provided users with a mobile version of a game that had previously been restricted to Facebook use. In 2013, Hay Day became the fourth highest ranking game in terms of revenue generated while a report from the same year showed the Supercell made almost $30 million every months from Hay Day and its other title Clash of Clans alone.

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