Will the Market Madness Maul Troubled Zynga?


I admit it: I'm a Zynga addict. The social strategy game Empires & Allies has me so hooked that I've pretty much sworn off requests to play sister games such as CityVille for fear I'll have even less of a life than I do now.

Lately, these concerns are fading -- not because of the pull of Zynga's aggressive marketing but because of outages. E&A has run remarkably slow this week, possibly because of ongoing trouble with Amazon.com's (NAS: AMZN) EC2 cloud-hosting infrastructure.

All of the company's games appear to have been affected. Separately, some FrontierVille players saw their games roll back over the weekend, eliminating progress they'd made in days prior. Zynga's games may be tempting, but my life is way too busy to wait around for wheezing servers to catch a digital breath.

All this comes as The Associated Press is reporting that eight proposed public offerings have been pulled -- spooked by Mr. Market's lunatic flailing. Groupon and Zynga could survive the turmoil and still get to an IPO, but if the daily-deal specialist's recent results are any indicator, competition is taking a toll.

Zynga has its own troubles with rivals. Google (NAS: GOOG) is courting developers to write social games for its Google+ social network, several news outlets reported last month. Contractual obligations may keep it from moving existing games away from Facebook. Around the same time, Electronic Arts (NAS: ERTS) paid $1.3 billion to acquire PopCap to boost an already-growing social-gaming portfolio. FacebookVille is about to become another face in the crowd.

Competition. Outages. Market panic. Zynga is one of the best-positioned businesses I've ever seen, but the combination of these factors has even me worrying about buying into this IPO. The negatives are beginning to outweigh the positives.

Do you agree? Disagree? Weigh in using the comments box below. And if you're in the mood for more stock ideas, try this free video. You'll walk away with a better understanding of a new computing revolution that's reshaping industries as well as a winning pick from our Motley Fool Rule Breakers scorecard. Start watching -- it's 100% free.

At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Google at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Google. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.