Farmville manufacturer Zynga blames changes to Facebook for drop in user engagement
Zynga entered 2011 as one of the hottest IPOs, but a year later, the company is one of a collection of tech companies — including such sizzle-less Silicon Valley names as Pandora and Groupon — that have been badly bruised by their public debuts.
Shares in the maker of Farmville and Mafia Wars plummeted nearly 40 percent in early-morning trading to $3.17 on its anemic second-quarter financial results. That's a steep drop from Zynga's high of $14.61 earlier this year.
It also doesn't exactly roll out the red carpet for Facebook. The social network that serves as the primary platform for Zynga's games is reporting its first quarterly earnings report since going public in May.
Zynga, which accounts for more than 10 percent of Facebook's revenue, blamed changes in the social network's platform for a quarter that, in the words of CEO Mark Pincus, saw "…declines in engagement and bookings for our web games."
Facebook's stock slid more than 5 percent to $27.81 on news of Zynga's weak quarter as Wall Street braced for a weak report from Mark Zuckerberg's brainchild.
Zynga missed analysts' expectations by reporting revenue of $332 million for the three month period. Projections had called for the company to report $343 million in revenue.
The game maker also reported losses of $22.8 million, or 3 cents a share, for the quarter and slashed its forecasts. Zynga lowered its revenue projections for 2012 from between $1.43 billion to $1.5 billion to between $1.15 billion to $1.23 billion.