Wall Street Is Tired of Zynga's Games

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Zynga (ZNGA) has a problem keeping gamers around, and now the same thing may be happening with its executives.

The social gaming giant revealed on Wednesday night that Chief Operating Officer John Schappert is leaving the company.

Even though the resignation is immediate, the SEC filing portrays the departure as amicable. Zynga claims that there weren't any disagreements between the two parties relating to the gaming company's operations, policies, or practices.

"Schappert leaves as a friend of the Company and it wishes him all the best," the filing concludes.

It's up to investors to believe Zynga or not.

Winning the Game Is All About Timing

Investors hate uncertainty, and that's what an "immediate" resignation presents.

Zynga's stock -- even though it has already shed more than two-thirds of its value since going public at $10 late last year -- moved lower on the news.

The timing is lousy.

It's been just two weeks since the company behind CityVille and Words With Friends posted a much smaller quarterly profit than the market was expecting. Revenue also clocked in lower than analysts were projecting. The company continues to attract more gamers to its growing arsenal of diversions, but it's generating less revenue per user.

Deal Something

Schappert was a member of the company's mergers and acquisitions committee, and that's not a popular place to be these days. Skeptics argue that the company overpaid in buying the parent company of Pictionary knockoff Draw Something.

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The game's popularity seems to have peaked just around the time of the purchase, and a common complaint about Zynga is that it has made too many "flavor of the week" purchases when its own collection of games begins to grow out of favor.

This doesn't mean that Zynga can just ride its organic growth. Gamers are tiring of Facebook (FB) and are quitting mobile games earlier in their product cycles. Zynga's bookings actually dipped sequentially in the company's most recent quarter.

Musical Boardroom Chairs With Friends

Was Schappert forced out after the company's embarrassing eight-month tenure as a public company or did he simply feel that the time was right to leave the company on his own?

We may never know the answers, and they may not matter. Zynga has already lost Wall Street's confidence. Losing a COO gives shareholders one more reason to worry, but there is so much credibility that needs to be restored before Zynga claws its way back into the double digits.

The market's tired of Zynga's games.

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Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Facebook.

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