Zynga Stock Dives as Facebook Keeps Backing Away(wired.com)
wired.com
Zynga Stock Dives as Facebook Keeps Backing Away
http://www.wired.com/business/2012/11/zynga-facebook-chill/
8 comments
Even though this is Wired, this is typical of financial reporting: to take a single day of price movements and write whole stories about them, completely ignoring larger price movements or alternative explanations. I've even seen news articles about stock market movements changed after the price swung from negative to positive in the same day... but the article kept the explanation for the price movement essentially the same! My guess is that this Wired story would have found a way to be written regardless of what the stock price did. But, getting to say that it "dove 7%" makes for good headlines (even if soared 8% just the day before, meaning that it just "dove" back to its original price).
While I don't think Zynga is a great company to invest in, its stock price is very volatile, which probably makes for good frequent attention grabbing headlines. Sure, this news was part of the reason the stock price was down, but apparently market price setters still think the company is 13% more valuable than it was 30 days ago.
While I don't think Zynga is a great company to invest in, its stock price is very volatile, which probably makes for good frequent attention grabbing headlines. Sure, this news was part of the reason the stock price was down, but apparently market price setters still think the company is 13% more valuable than it was 30 days ago.
One of the early innovations of Bloomberg was to totally automate certain classes of news story, driven entirely by data. As you can see from spending any length of time browsing Google Finance, the number of this class of stories in the present day is absolutely huge, from a wide variety of 'news' outlets.
"Top movers! Miners down 0.00001% as fears grow over $calendar->getNextECBAnnouncement()"
What's more terrifying is that Google Finance even syndicates these articles, and that people trade off of them - "informed" traders, buying and selling based on articles that are quite literally generated from sampling noise
"Top movers! Miners down 0.00001% as fears grow over $calendar->getNextECBAnnouncement()"
What's more terrifying is that Google Finance even syndicates these articles, and that people trade off of them - "informed" traders, buying and selling based on articles that are quite literally generated from sampling noise
Do you have a reference for this? As someone with a Bloomberg terminal I've found their wire service completely free of that kind of junk more typical of tech journalism, MarketWatch, or StockTwits.
Bloomberg mentions it in his autobiography (Bloomberg by Bloomberg) while Taleb mentions encountering similar stories on his Bloomberg terminal in Fooled by Randomness.
I know a lot of Bloomberg reporters and a bureau chief for a pretty big market and they definitely do not work this way. For starters, the people relying on the terminals (and paying a lot of money for them) are savvier than that.
> certain classes of
As commented below, Bloomberg mentions it in his autobiography.
As commented below, Bloomberg mentions it in his autobiography.
A one-day stock price decrease isn't the news.
Zynga was in a very special place at a very special time. Social gaming had an amazing stretch of months, but that time seems to have passed, at least in terms of being on fire. Zynga's relationship with Facebook is really the only thing that set them apart. Innovative games? They took the same game and kept reskinning it. When that fizzled out, they began copying other games wholesale. (lol at a title of theirs I saw recently: "Scramble with Friends") They're not a gaming company, but did a pretty good job of looking like one and getting paid in the process.
However, going public was dumb. They should have piled up cash and kept it all to themselves. Going public is meant for companies that are capable of being in it for the long haul. Not for companies that have figured out how to be successful in an industry that didn't even exists two years prior.
Zynga can probably transition into other areas, like mobile games, online gambling, etc. However, they are just one of many in that space. They have no secret sauce or magic. They can probably turn a profit, but nothing that can bring their stock price back to where it was.
The only ones who care how Zynga does are the crazy ones that hold ZNGA. Otherwise, they're just another gaming company right? If you do hold ZNGA, well, that sucks. Not a "sad set of circumstances" suck. More like "I blew my money on a Vegas weekend" suck.
Zynga was in a very special place at a very special time. Social gaming had an amazing stretch of months, but that time seems to have passed, at least in terms of being on fire. Zynga's relationship with Facebook is really the only thing that set them apart. Innovative games? They took the same game and kept reskinning it. When that fizzled out, they began copying other games wholesale. (lol at a title of theirs I saw recently: "Scramble with Friends") They're not a gaming company, but did a pretty good job of looking like one and getting paid in the process.
However, going public was dumb. They should have piled up cash and kept it all to themselves. Going public is meant for companies that are capable of being in it for the long haul. Not for companies that have figured out how to be successful in an industry that didn't even exists two years prior.
Zynga can probably transition into other areas, like mobile games, online gambling, etc. However, they are just one of many in that space. They have no secret sauce or magic. They can probably turn a profit, but nothing that can bring their stock price back to where it was.
The only ones who care how Zynga does are the crazy ones that hold ZNGA. Otherwise, they're just another gaming company right? If you do hold ZNGA, well, that sucks. Not a "sad set of circumstances" suck. More like "I blew my money on a Vegas weekend" suck.
Well said.
As far as Facebook. This news is great. It gives confidence to investors that they don't need Zynga to do well in terms of revenue. (Although they should have already knew that).
As far as Facebook. This news is great. It gives confidence to investors that they don't need Zynga to do well in terms of revenue. (Although they should have already knew that).
I sort of agree with you, but Zynga is currently so dependent on Facebook that even small or expected news like this is major news for Zynga. I'd call a 6% drop fairly significant because investors already knew the relationship with facebook was souring and have probably priced a lot of it in.
It's worth noting that Zynga has diversified revenue streams other than the games themselves: they have a pending Draw Something TV show [1] and physical merchandise [2].
That probably won't be enough to save the company, though. It wouldn't surprise me if Zynga pivots into a Rovio.
[1] http://www.tvguide.com/News/CBS-Draw-Something-Pilot-1048932...
[2] http://i.imgur.com/OZSZb.jpg
That probably won't be enough to save the company, though. It wouldn't surprise me if Zynga pivots into a Rovio.
[1] http://www.tvguide.com/News/CBS-Draw-Something-Pilot-1048932...
[2] http://i.imgur.com/OZSZb.jpg
Having friends who have gotten TV game show concepts to the pilot phase, it doesn't pay jack squat unless you achieve Jeopardy! or Wheel Of Fortune level of fame.
can you point me to the estimated revenue numbers?
if zynga wants me to consider this going fwd they need to throw potential investors a bone. such "revenue streams" with no quantitative backup is plain speculation, water cooler chitchat.
if zynga wants me to consider this going fwd they need to throw potential investors a bone. such "revenue streams" with no quantitative backup is plain speculation, water cooler chitchat.
I think the idea is that each player gets their own revenue stream and clicks on it until it gets bigger. You can share your "earnings results" with friends and trade rare revenue stream features, and there's a kind of limited PvP setup where you can pit your revenue stream against another player's and click a bunch of times and one of your revenue streams gets bigger.
We should all short Zynga. Zynga has nothing special, no competitive advantage, no intellectual capital, no special sauce to maintain their market share.. and what OTHER social platforms are there for games? Twitter? Google+?
"Oh, our plan is to launch poker in the UK!" Um.. ok, and compete with 10000 other companies that had a decade head start and know all about the online poker business. Good luck with that.
"Oh, our plan is to launch poker in the UK!" Um.. ok, and compete with 10000 other companies that had a decade head start and know all about the online poker business. Good luck with that.
Oh, our plan is to launch poker in the UK!" Um.. ok, and compete with 10000 other companies that had a decade head start and know all about the online poker business. Good luck with that.
I think your reasoning is perfectly logical and yet, it sounds similar to all the VCs who turned down google back in the day because hey all these other guys had been doing search for years so how can you compete with em? You may argue that Google actually had a plan to compete with them to which I'd ask you in how much depth you have researched Zynga's poker plans before reaching the conclusions in your post.
I think your reasoning is perfectly logical and yet, it sounds similar to all the VCs who turned down google back in the day because hey all these other guys had been doing search for years so how can you compete with em? You may argue that Google actually had a plan to compete with them to which I'd ask you in how much depth you have researched Zynga's poker plans before reaching the conclusions in your post.
While I don't think the Google Search : Zynga Poker comparison is fair, I think that your comments' parent has a valid point as the online gambling market is pretty saturated. It would be interesting to see if they can do something innovative for the online gambling marketplace.
Probably a long shot, but should online gaming ever come back to the US (and perhaps this will work in other markets), maybe Zynga can position themselves as the choice for casual gambler. If they can convert a bunch of their Farmville, etc users into playing poker, it could make for some very soft games. I don't think you'll see them as the place to be for serious players who want high limits or lots of different tournaments/options, but something that even the most casual of poker players/gamblers can be very lucrative (as well as draw in low/mid limit sharks who want easy cash). This all depends on the premise that the friction from being a player of one Zynga game to being a gambling player on a Zynga game is less than being a player of a Zynga game and also joining an unrelated gambling site.
Zynga has nothing special, no competitive advantage, no intellectual capital, no special sauce to maintain their market share
You're absolutely right. Sadly their valuation, barely higher than the value of their real estate and cash pile, reflects this.
You're absolutely right. Sadly their valuation, barely higher than the value of their real estate and cash pile, reflects this.
They seem to be doing more or less OK with "nothing special," regardless of what any of thinks of their techniques for doing so. What's to stop them from copying yet another business and surviving on that?
Facebook will be able to buy them for the price of a taco soon.
A virtual Facebook taco, at that.
the taco would be a better investment.
Yeah Zynga sucks but this is another cautionary tale of relying on someone else's (web) platform.
Not really. Zynga isn't failing because they were screwed by a Facebook policy change or really anything Facebook themselves are doing (unlike, say, Twitter's recent API brouhaha), but because of their business model. AznHisoka in this thread said it better than I can; they have nothing to build a business on.
Facebook changed their platform right underneath them.
Well that was completely unexpected...
Said no one ever.
Said no one ever.
I don't understand why the market reacted negatively to this news. There are a number of positives:
-They don't have to use FB credits -They don't have to use anything FB on Zynga.com -They got a guarantee if their is real-money gaming on FB.com, they have to be allowed in
So what if FB can now make their own games? They aren't going to.
-They don't have to use FB credits -They don't have to use anything FB on Zynga.com -They got a guarantee if their is real-money gaming on FB.com, they have to be allowed in
So what if FB can now make their own games? They aren't going to.
good fuck you zynga. My first taste of their shitty ways, was just the other week. lidgren - is the best open networking library available for indie gamers and this fuck, goes and duplicates the code base, re-releasing it on a separate source control site. THEN he mails the group, including the author, asking for permission.
After hearing about this, the author understandably is concerned about splitting the dev hub of his code across multiple sites, and its community, culminating in him saying this is not a good idea.
The stupid fuck, replies saying he already has done it, and matter of factly states it is getting quite popular.
Community hits back, tells him it is detrimental to everyone, and asks him to take it down. Eventually after a few days of building pressure, he does.
I was curious, did a little research. Turns out the dickhead was an important dev from Zynga.
I have omitted names.
Fuck Zynga.
After hearing about this, the author understandably is concerned about splitting the dev hub of his code across multiple sites, and its community, culminating in him saying this is not a good idea.
The stupid fuck, replies saying he already has done it, and matter of factly states it is getting quite popular.
Community hits back, tells him it is detrimental to everyone, and asks him to take it down. Eventually after a few days of building pressure, he does.
I was curious, did a little research. Turns out the dickhead was an important dev from Zynga.
I have omitted names.
Fuck Zynga.
Its understandable that you don't like zynga but this post isn't constructive. In general terms rant != cool.
Also, as far as I can tell the license is MIT so he can pretty much do whatever the hell he wants with it. Open source goes both ways.
the point of the rant is that he was a dick
I feel you, but there's some serious dicks in the open source community as well. It seems the same behaviors somehow have different meaning if they're attached to a company that it's popular to dislike.
See my comment got down voted, and rereading it, I can see why. I wasn't saying that all that everyone in the open source community is a dick, but rather, a person can be a dick no matter who they work for. Nothing intrinsic about who they work for, or whether they're part of the OSS community. However, there seems to be a confirmation bias when it's a company we're predisposed to dislike.
but, how do you really feel?
Not sure about Zynga as a company, but it's easy to overreact to the market's reaction to this news.