Why Zynga Fell to All-Time Lows

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Zynga (NAS: ZNGA) have fallen by as much as 12% today to all-time lows on continued fears of a slowdown in social gaming, sparked by bearish analyst comments.

So what: Cowen & Co. analyst Doug Creutz says that daily average unique users have fallen by 4.8 million -- to 54.2 million -- over the past month, indicating that Facebook's (NAS: FB) desktop platform is past its prime. He believes that the platform has hit a "negative inflection point" as gamers migrate toward mobile platforms.


Now what: On the other hand, Zynga is aggressively trying to move into mobile gaming, but for now still relies on Facebook for the vast majority of sales. Just as mobile is a weak spot for Facebook, it's also one for Zynga. Creutz notes that this is the second, consecutive, significant, sequential drop in daily users, which doesn't bode well for its future prospects. That figure above represents an 8.2% plunge in daily users.

Interested in more info on Zynga? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Facebook. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners