Zynga shares plummet as Facebook game craze wanes(reuters.com)
reuters.com
Zynga shares plummet as Facebook game craze wanes
http://www.reuters.com/article/2012/06/12/us-zynga-stock-idUSBRE85B0TM20120612
14 comments
They have 0.60 cash and investments (both short term and long term) per share. Last quarter they lost 0.12 per share.
You may call their business a real business but fact of the matter is that "real business" is handing them huge losses every quarter, so if they do not improve things drastically soon, that cash will not last them long.
You may call their business a real business but fact of the matter is that "real business" is handing them huge losses every quarter, so if they do not improve things drastically soon, that cash will not last them long.
Last quarter they made a profit, but it was a net loss after adjusting for stock-related expenses. [1]
Also, bookings were up. I think it's important to note that after FB's updated S1 everyone had worried since Zynga comprised less of Facebook's Q1 revenue. What all news outlets failed to note is that FB credit associated purchases didn't go down but actually ad impressions on Facebook's part. It's possible Zynga is trying to drive pageviews of their own network rather than Facebook. (Check the S1) [2]
[1]: http://venturebeat.com/2012/04/26/zynga-beats-q1-earnings-es...
[2]: http://sec.gov/Archives/edgar/data/1326801/00011931251217567...
Also, bookings were up. I think it's important to note that after FB's updated S1 everyone had worried since Zynga comprised less of Facebook's Q1 revenue. What all news outlets failed to note is that FB credit associated purchases didn't go down but actually ad impressions on Facebook's part. It's possible Zynga is trying to drive pageviews of their own network rather than Facebook. (Check the S1) [2]
[1]: http://venturebeat.com/2012/04/26/zynga-beats-q1-earnings-es...
[2]: http://sec.gov/Archives/edgar/data/1326801/00011931251217567...
> so if Instagram is worth $1B to Facebook, ZNGA must be worth somewhere north of $2.5B, its current enterprise value.
This doesn't make sense. Facebook does not own stock market, neither they are some sort of a measurement for other transactions.
Zuck bought it because it was last moment to spend money they didnt have and clearly it was a threat to FB userbase (but sooner or later another Instagram will come up that FB cannot afford). Further Instagram deal was a scam [1] that hopefully will get investigated by Sec (?), for all FB shareholders' sake.
[1] http://www.donnaklinenow.com/investigation/instagram-scam
This doesn't make sense. Facebook does not own stock market, neither they are some sort of a measurement for other transactions.
Zuck bought it because it was last moment to spend money they didnt have and clearly it was a threat to FB userbase (but sooner or later another Instagram will come up that FB cannot afford). Further Instagram deal was a scam [1] that hopefully will get investigated by Sec (?), for all FB shareholders' sake.
[1] http://www.donnaklinenow.com/investigation/instagram-scam
I was a bit tongue-in-cheek. I don't think Instagram is worth anywhere near even $100M. They have $0 in revenues. I think if they were to try to self-sustain themselves from their own revenues, they would have gone under, but what do I know.
That being said, ZNGA makes roughly $1B in revenues, which gives them 2-3x current revenues. I perceive that as being cheap, but I could very well be wrong. I'm just placing my bets, and if they don't turn out, then I'll sell at a loss.
That being said, ZNGA makes roughly $1B in revenues, which gives them 2-3x current revenues. I perceive that as being cheap, but I could very well be wrong. I'm just placing my bets, and if they don't turn out, then I'll sell at a loss.
That sounds like a modern version of the Chewbacca Defense. "If Instagram is worth $1B, then <insert any crazy logical conclusion you want to make here>"
I'm not sure why you're getting the downvotes. Everything you say is true. Clearly Zynga has real value; they are a profitable company. Perhaps they were overvalued at IPO and (maybe Facebook was too) and that could explain their stock-price drop in the last month.
Often on HN, any non-negative mention of Zynga will be downvoted.
Often on HN, any non-negative mention of Zynga will be downvoted.
>> they are a profitable company
Citation? SEC filings say they are losing money at a rapid clip.
Citation? SEC filings say they are losing money at a rapid clip.
Many people find the incessant game posts on Facebook annoying. Perhaps that explains some downvotes.
But I do agree with everyone. :) Yes, it's annoying. Yes, it was a fad, initially. But yes, there must be some enduring value in the business model, after the bubble bursts and people start thinking more rationally about it.
But I do agree with everyone. :) Yes, it's annoying. Yes, it was a fad, initially. But yes, there must be some enduring value in the business model, after the bubble bursts and people start thinking more rationally about it.
Basing any valuation rationale off the Instagram purchase makes me wonder if you meant to be sarcastic. Given that it had essentially zero revenue, it's almost impossible to do any kind of comparison, anyway.
Just be prepared for the scenario where both Zynga and Instagram were substantially overvalued.
Just because Mark Zuckerburg acquired a company for a Billion dollars that had NO revenue, NO customers, and NO business, doesn't mean the rest of the investment world is smoking the Social Network crack pipe.
Just because Mark Zuckerburg acquired a company for a Billion dollars that had NO revenue, NO customers, and NO business, doesn't mean the rest of the investment world is smoking the Social Network crack pipe.
Well, I wish you luck. But I think you've made a mistake (unless you only plan to hold it for a short time).
One thing I've always wondered with these headlines: how do they establish causality? Do they ask some pundit why shares dropped 10% in a day and run with that?
I remember reading an interview (probably in one of Jack Schwager's Market Wizards books) with a guy who had been a Wall Street analyst. He kept the news reports of the day sorted into "good news" and "bad news" piles on his desk. When a journalist called to ask why something had gone up that day, he'd cite whatever was on top of the good news pile. When asked why something had gone down, he'd cite whatever was on top of the bad news pile.
Yes, I think you're right on your source.
In short, markets move around for a whole host of random reasons.
The nightly news 'the market moved lower on profit taking' or 'the market moved higher on positive news X' is just rubbish.
Occasionally, there is a cause-and-effect like an unexpected interest rate change, or a better-than-expected sales figure in a key industry, but for the rest of the time, it's just random movement.
The worst thing is the need to commentate on it confuses the correlation in the general publics mind, so people believe you can talk the economy up or down, which is an assertion I don't agree with.
In short, markets move around for a whole host of random reasons.
The nightly news 'the market moved lower on profit taking' or 'the market moved higher on positive news X' is just rubbish.
Occasionally, there is a cause-and-effect like an unexpected interest rate change, or a better-than-expected sales figure in a key industry, but for the rest of the time, it's just random movement.
The worst thing is the need to commentate on it confuses the correlation in the general publics mind, so people believe you can talk the economy up or down, which is an assertion I don't agree with.
Probably they are having fun looking at this and extrapolating from there:
https://www.google.com/finance?chdnp=1&chdd=1&chds=1...
https://www.google.com/finance?chdnp=1&chdd=1&chds=1...
Typically you buy a tech stock for growth since they rarely pay dividends. When you see that the growth is negative and potentially accelerating there is probably little reason to hold the stock-particularly when they have no earnings.
Yes, but that doesn't answer the question. Sure, it makes sense that there's not much reason to hold stock when the growth is negative. The question was: how do you decide why the growth is negative? This is an important, because sometimes stocks dip for a day, and sometimes they dip for a decade. Knowing why would seem to be the best basis for investing.
The reality is a bit murkier. Usually a hedge fund "leaks" info to the journalists (someone familiar with the matter is the standard euphemism) which is sufficiently plausible so as to become the reality
Disagree that headline argues causality.
the same formula can be used with not correlation but simply timing:
"As Rome burns, Nero fiddles away."
"Detroit housing prices at record prices, even as millions leave the city."
"As the average salary in the City approaches six figures, those without a job are having trouble finding any job at all."
Does it make sense to set this backdrop, even without correlation? Of course - it's interesting.
however, in this case the author does a good job by setting this backdrop:
if the craze of playing games on Facebook has waned -- something the article hopefully establishes or reports on, then it is an interesting backdrop to news that Zynga's share price is falling - wouldn't you say?
(If fewer people are playing Zynga's games on Facebook, which is where most of Zynga's games are played.)
Whether this is just a backdrop or a causal relationship with Zynga's profit and share price is for you to decide however you want. The headline doesn't force it on you, but simply set a backdrop of a macro-trend.
I think it's a very interesting and well-written headline. It's better than most of them.
the same formula can be used with not correlation but simply timing:
"As Rome burns, Nero fiddles away."
"Detroit housing prices at record prices, even as millions leave the city."
"As the average salary in the City approaches six figures, those without a job are having trouble finding any job at all."
Does it make sense to set this backdrop, even without correlation? Of course - it's interesting.
however, in this case the author does a good job by setting this backdrop:
if the craze of playing games on Facebook has waned -- something the article hopefully establishes or reports on, then it is an interesting backdrop to news that Zynga's share price is falling - wouldn't you say?
(If fewer people are playing Zynga's games on Facebook, which is where most of Zynga's games are played.)
Whether this is just a backdrop or a causal relationship with Zynga's profit and share price is for you to decide however you want. The headline doesn't force it on you, but simply set a backdrop of a macro-trend.
I think it's a very interesting and well-written headline. It's better than most of them.
The headline might not argue causality but I think it certainly is written in a way to imply it. This is a common structure for headlines about stock prices moving large amounts in either direction. The average reader does not like to think that finding a singular reason for something like this is impossible.
Zynga is said to be moving games into the mobile market, but you also have to figure that being a gaming company is hard. You're top-rated game will be supplanted by something else in short order and you have to constantly be updating.
I think that the way Zynga acquired its customers/users is exacerbating the situation. If your friends are all there you feel compelled to join too, but if some leave it's socially acceptable to follow them elsewhere.
Since we're talking about "social" gaming, I also have to wonder whether part of the drop isn't seasonal ... at least where I live, it's now nice enough to spend a lot of time outside socializing (picnics, frisbee, t-ball, etc) so perhaps there's just not the boredom to drive as much traffic?
I think that the way Zynga acquired its customers/users is exacerbating the situation. If your friends are all there you feel compelled to join too, but if some leave it's socially acceptable to follow them elsewhere.
Since we're talking about "social" gaming, I also have to wonder whether part of the drop isn't seasonal ... at least where I live, it's now nice enough to spend a lot of time outside socializing (picnics, frisbee, t-ball, etc) so perhaps there's just not the boredom to drive as much traffic?
They're not so much social games as they are games on a social platform. Some wouldn't even call them games, nor social.
No idea about the seasonal aspects though. Summer vacations typically boost online games.
No idea about the seasonal aspects though. Summer vacations typically boost online games.
Please do not be a contrarian who buys ZNGA. You will probably lose money.
They have 3,000 employees,[1] even though their business model revolves largely around cloning[a] games that are simple enough for very small teams to create.[2] They're losing money; their EPS is -1.30.[3][4] Just because they have cash from investors doesn't mean that the business model will make significant money in the long run and it's made more complicated by the fact that they have a very heavy dependence on Facebook.[5]
They're also dependent on casual gamers (who don't have much loyalty or will to pay) and current trends.[b] Apparently, only 2% of their customers pay for their games.[5] Their stock market valuation seems largely mapped to their active user count[6] (and also Facebook's share prices[5]) rather than their financials.[c] In fact, I can't even say that they're overvalued because that involves looking at the P/E and with a negative EPS, I can't really do an apples-to-apples P/E comparison of Zynga against companies that are actually listed as profitable. Is a -3.8 P/E overvalued?[4] It certainly is risky!
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[a] They also buy some companies behind popular games too, like OMGPOP. This isn't necessarily a good idea.[7]
[b] The use of the term "game craze" in the title of the parent article implies that part of the reason ZNGA has a valuation in the billions is because of the current trendiness of Facebook games. The problem with relying on trendiness for investments is that when there's something even trendier (i.e. mobile apps), all the investor money that chases trendy stuff could simply go there instead.
[c] It was a popular dot-com bubble plan to focus on market share with a free product at a sustained financial loss.[8] Of course, it's too early to tell if ZNGA will sustain its losses in the long run because its stock is too young. Still, it's very risky.
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[1] https://en.wikipedia.org/wiki/Zynga
[2] https://s3.amazonaws.com/nbpromo/dearzynga.jpg
[3] http://www.google.com/finance?q=NASDAQ:ZNGA
[4] http://data.cnbc.com/quotes/ZNGA
[5] http://beta.fool.com/buffettbeater/2012/06/11/dont-get-zynge...
[6] http://www.marketwatch.com/story/zynga-falls-on-ugly-faceboo...
[7] http://www.forbes.com/sites/insertcoin/2012/05/04/draw-somet...
[8] https://en.wikipedia.org/wiki/Dot-com_bubble#Bubble_growth
They have 3,000 employees,[1] even though their business model revolves largely around cloning[a] games that are simple enough for very small teams to create.[2] They're losing money; their EPS is -1.30.[3][4] Just because they have cash from investors doesn't mean that the business model will make significant money in the long run and it's made more complicated by the fact that they have a very heavy dependence on Facebook.[5]
They're also dependent on casual gamers (who don't have much loyalty or will to pay) and current trends.[b] Apparently, only 2% of their customers pay for their games.[5] Their stock market valuation seems largely mapped to their active user count[6] (and also Facebook's share prices[5]) rather than their financials.[c] In fact, I can't even say that they're overvalued because that involves looking at the P/E and with a negative EPS, I can't really do an apples-to-apples P/E comparison of Zynga against companies that are actually listed as profitable. Is a -3.8 P/E overvalued?[4] It certainly is risky!
-----
[a] They also buy some companies behind popular games too, like OMGPOP. This isn't necessarily a good idea.[7]
[b] The use of the term "game craze" in the title of the parent article implies that part of the reason ZNGA has a valuation in the billions is because of the current trendiness of Facebook games. The problem with relying on trendiness for investments is that when there's something even trendier (i.e. mobile apps), all the investor money that chases trendy stuff could simply go there instead.
[c] It was a popular dot-com bubble plan to focus on market share with a free product at a sustained financial loss.[8] Of course, it's too early to tell if ZNGA will sustain its losses in the long run because its stock is too young. Still, it's very risky.
-----
[1] https://en.wikipedia.org/wiki/Zynga
[2] https://s3.amazonaws.com/nbpromo/dearzynga.jpg
[3] http://www.google.com/finance?q=NASDAQ:ZNGA
[4] http://data.cnbc.com/quotes/ZNGA
[5] http://beta.fool.com/buffettbeater/2012/06/11/dont-get-zynge...
[6] http://www.marketwatch.com/story/zynga-falls-on-ugly-faceboo...
[7] http://www.forbes.com/sites/insertcoin/2012/05/04/draw-somet...
[8] https://en.wikipedia.org/wiki/Dot-com_bubble#Bubble_growth
Well their 180 day lockup is about to expire as well. I would fully expect some folks to liquidate next week, perhaps this is in anticipation of that.
One of the weird things about World of Warcraft was that there are (or were) folks who would sort of hang out in that world just to socialize and sometimes, perhaps, go out and kill some stuff. The 'hanging out' part was key, and I am convinced that if Blizzard could figure out a way for folks to sit down and play cards or checkers or something it would be popular.
People like to sit around and socialize, and if they can do it with an 'excuse' like a game of cards or a table top game, well that is just icing on the cake. I don't think Zynga has quite got the formula down yet but when they do, or someone does, you will see the rise of the 'Grandma chat rooms'.
One of the weird things about World of Warcraft was that there are (or were) folks who would sort of hang out in that world just to socialize and sometimes, perhaps, go out and kill some stuff. The 'hanging out' part was key, and I am convinced that if Blizzard could figure out a way for folks to sit down and play cards or checkers or something it would be popular.
People like to sit around and socialize, and if they can do it with an 'excuse' like a game of cards or a table top game, well that is just icing on the cake. I don't think Zynga has quite got the formula down yet but when they do, or someone does, you will see the rise of the 'Grandma chat rooms'.
> The 'hanging out' part was key, and I am convinced that if
> Blizzard could figure out a way for folks to sit down and play
> cards or checkers or something it would be popular.
Another advantage, of course, is that you don't necessarily have to tie your full real life identity to your social identity. This allows people to be freer about what they can say or do, and might be more appealing.[a]
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[a] Yes, an argument can be made that attaching one's RL name to a post makes abuse less likely, but I believe that effective moderation of a community is a much stronger factor in having a quality community than simply requiring real names. I've seen places on the Internet where people were happy to flame using their full name and identity because of no moderators. On the other hand, HN is a good example of a civil online environment where real names are not required.
My understanding with Zynga speculators is that the US may soon legalize online gambling and that Zynga is well-positioned to take advantage if that happens.
If someone is telling you that the US 'may soon legalize online gambling' then you are not listening to someone who understands US policy making. I expect that the US will legalize marijuana before they legalize gambling, and making pot legal is at least a decade away, maybe two.
The reasoning is two fold, first gambling is considered a 'sin' by many religions (which is why Las Vegas was sometimes called 'sin city') as was same sex marriage. There is a chance we will finally clear the way for same sex marriage after a decade of staunch resistance by religious interests, and if they 'lose' that fight they will certainly try to draw a line in the sand with gambling. These same interests have been trying over turn the right to privacy ruling which made abortion legal.
EDIT: add reasoning.
The reasoning is two fold, first gambling is considered a 'sin' by many religions (which is why Las Vegas was sometimes called 'sin city') as was same sex marriage. There is a chance we will finally clear the way for same sex marriage after a decade of staunch resistance by religious interests, and if they 'lose' that fight they will certainly try to draw a line in the sand with gambling. These same interests have been trying over turn the right to privacy ruling which made abortion legal.
EDIT: add reasoning.
Uh, gambling is legal all over the U.S. now. There are casino's and off track betting all over the place, keno in bars, lotto tickets and scratchers in every convenience store and supermarket. Do you actually live in the U.S.?
The issue with online gambling is that in its previous form, when it was finally and fully outlawed in 2006, the Federal and state governments weren't getting their cut of the take and many people weren't reporting winnings to the IRS.
Its not especially a moral or religious issue now, its more a taxation and revenue issue. The House Financial Services Committee approved a bill to legalize online poker and some other forms of online gambling in 2009, it just hasn't made it all the way through Congress yet. I imagine there will be some Republicans opposed to it on religious grounds but once Congress figures out how to tax and regulate it and how much revenue they can rake in off it, it will be back.
The issue with online gambling is that in its previous form, when it was finally and fully outlawed in 2006, the Federal and state governments weren't getting their cut of the take and many people weren't reporting winnings to the IRS.
Its not especially a moral or religious issue now, its more a taxation and revenue issue. The House Financial Services Committee approved a bill to legalize online poker and some other forms of online gambling in 2009, it just hasn't made it all the way through Congress yet. I imagine there will be some Republicans opposed to it on religious grounds but once Congress figures out how to tax and regulate it and how much revenue they can rake in off it, it will be back.
Types of gambling are legal all over the U.S.: betting on horse races, for historical reasons, and state/regional lotteries (which includes "scratchers").
Keno and other forms of gambling are legal only in Atlantic City and Nevada, for historical reasons. Gambling is not illegal in reservations but "indian" casinos are generally subject to approval by the federal government.
Congress has known for decades how to tax gambling revenues. They have simply chosen not to do so. Generally, the justification for not legalizing gambling nationwide is that the tax revenues raised from gambling activities is far outweighed by the increase in crime and decrease in properties values.
Congress chose to outlaw online gambling in 2006 as a result of many, many individuals developing chronic gambling addictions that destroyed their own lives and the lives of their families. The alternative was heavy regulation, but the casino industries (Vegas, Atlantic City, and various tribes) fought against it.
Keno and other forms of gambling are legal only in Atlantic City and Nevada, for historical reasons. Gambling is not illegal in reservations but "indian" casinos are generally subject to approval by the federal government.
Congress has known for decades how to tax gambling revenues. They have simply chosen not to do so. Generally, the justification for not legalizing gambling nationwide is that the tax revenues raised from gambling activities is far outweighed by the increase in crime and decrease in properties values.
Congress chose to outlaw online gambling in 2006 as a result of many, many individuals developing chronic gambling addictions that destroyed their own lives and the lives of their families. The alternative was heavy regulation, but the casino industries (Vegas, Atlantic City, and various tribes) fought against it.
This is just incorrect
Gambling is legal throughout the country to varying degrees in various forms. Black Hawk, Colorado has legalized gambling up to $100 per bet, for example.
Gambling is legal throughout the country to varying degrees in various forms. Black Hawk, Colorado has legalized gambling up to $100 per bet, for example.
Gambling is illegal nationwide under federal law, except where specifically excepted. Horse races, Nevada, and Atlantic City are specifically excluded from the gambling prohibition, and indian reservations do not fall under federal jurisdiction. Sports-gambling is also illegal nationwide, except that bets may be placed anywhere to Atlantic City or Nevada sportsbooks (and for this reason, almost all sportsbooks are located in Nevada).
If gambling is going on in Black Hawk, CO, it is not "gambling" within the legal definition of the term or it is not legal. Alternatively, it may simply be an office for a (legal) sports-book operation that operates out of Nevada. Chances are, however, that it is not a legal operation and simply does not do enough business to warrant federal resources.
If gambling is going on in Black Hawk, CO, it is not "gambling" within the legal definition of the term or it is not legal. Alternatively, it may simply be an office for a (legal) sports-book operation that operates out of Nevada. Chances are, however, that it is not a legal operation and simply does not do enough business to warrant federal resources.
No it is not. Gambling is legal under federal law and is left up to states to decide restrictions. You are just flat out uninformed.
Wikipedia is wrong on this subject, unless you greatly expand the legal definition of gambling. The gambling prohibition passed around the same time as the alcohol prohibition, but survived because it grandfathered existing gambling locales (Nevada, Atlantic City, Washington, and Delaware, generally, though the latter two have since outlawed or restricted gambling.)
This is why there are no casinos (other than indian casinos) outside of Nevada, Atlantic City, and reservations. Do you really think that California wouldn't have a billion casinos (in addition to the Indian Casinos) if they weren't prohibited from doing so by federal law?
Gambling generally means any wager for cash, where skill does not play a role in the chance of winning the prize. Skill generally applies to intermediate steps en route to winning, not "skill" in selecting the prize-winning item. This includes lotteries and horse racing, but these forms of gambling are specifically excepted from the gambling prohibition. Most traditional casino card games are considered games of "skill" rather than gambling, which is why card houses are legal (subject to local restrictions).
Sports books are legal, so long as they are based in a state where gambling was legal when the gambling prohibition took affect.
This is why there are no casinos (other than indian casinos) outside of Nevada, Atlantic City, and reservations. Do you really think that California wouldn't have a billion casinos (in addition to the Indian Casinos) if they weren't prohibited from doing so by federal law?
Gambling generally means any wager for cash, where skill does not play a role in the chance of winning the prize. Skill generally applies to intermediate steps en route to winning, not "skill" in selecting the prize-winning item. This includes lotteries and horse racing, but these forms of gambling are specifically excepted from the gambling prohibition. Most traditional casino card games are considered games of "skill" rather than gambling, which is why card houses are legal (subject to local restrictions).
Sports books are legal, so long as they are based in a state where gambling was legal when the gambling prohibition took affect.
You are incorrect. Casino gambling is entirely state regulated, there is no Federal law controlling it. More and more of them are allowing it because its an easy way to boost their tax revenues without raising income and property taxes.
The Mississippi gulf coast has had casino gambling since the 1990's when it was authorized by the state, http://www.worldcasinodirectory.com/mississippi.
Colorado voters legalized casino gambling in BlackHawk in the 1990's as well, http://www.blackhawkcolorado.com.
Detroit legalized gambling in the 1990's, and a number of state legalized it on riverboats on the Mississipi in the 90's as well.
The Federal laws on the subjects mostly apply to interstate gambling enterprises which is where they do have jurisdiction, in particular sports betting and the 2006 law which outlawed online gambling primarily by preventing banks from transferring funds to and from online gambling sites.
The Mississippi gulf coast has had casino gambling since the 1990's when it was authorized by the state, http://www.worldcasinodirectory.com/mississippi.
Colorado voters legalized casino gambling in BlackHawk in the 1990's as well, http://www.blackhawkcolorado.com.
Detroit legalized gambling in the 1990's, and a number of state legalized it on riverboats on the Mississipi in the 90's as well.
The Federal laws on the subjects mostly apply to interstate gambling enterprises which is where they do have jurisdiction, in particular sports betting and the 2006 law which outlawed online gambling primarily by preventing banks from transferring funds to and from online gambling sites.
The idea of marriage as a sacred rite and institution is far more universal and fundamental to Christianity than prohibitions on gambling. I don't think your model of Christianity is very good.
Illinois now lets you purchase lottery tickets (including the multistate Mega Millions and Powerball games) over the net using a credit card.
One step at a time. And only a matter of time before the 72 hour lottery pool morphs into millisecond real time gambling.
One step at a time. And only a matter of time before the 72 hour lottery pool morphs into millisecond real time gambling.
[deleted]
If US really legalizes online gambling Zynga is not the best play. IMHO MGM Resorts (MGM) or Las Vegas Sands (LVS) are better plays if you are bullish.
>One of the weird things about World of Warcraft was that there are (or were) folks who would sort of hang out in that world just to socialize and sometimes, perhaps, go out and kill some stuff. The 'hanging out' part was key, and I am convinced that if Blizzard could figure out a way for folks to sit down and play cards or checkers or something it would be popular.
Some of the most popular WoW UI mods were popcap-developed versions of Peggle and Bejeweled. Poker mods also were fairly popular.
Not sure if any of them still work, though.
Some of the most popular WoW UI mods were popcap-developed versions of Peggle and Bejeweled. Poker mods also were fairly popular.
Not sure if any of them still work, though.
Looks like ZNGA's lockup period has already expired:
http://www.ifre.com/equities-zynga-insiders-race-to-cash-in-...
"IPO underwriters controversially agreed to early waiver of a lock-up agreement preventing insider selling within 165 days of going public"
So lock-up expired May 28.
http://www.ifre.com/equities-zynga-insiders-race-to-cash-in-...
"IPO underwriters controversially agreed to early waiver of a lock-up agreement preventing insider selling within 165 days of going public"
So lock-up expired May 28.
2% of customers paying is pretty average for a free-to-play model. If Zynga has 60 million daily active users, thats 1.2M payers per day, more than enough to be profitable you'd think.
The real question is the value of their users, and whether Zynga can increase that value. Zynga's largest expense is probably marketing and CPI costs have more than likely doubled (I don't know the exact numbers) on Facebook over the past couple years. If Zynga hasn't increased the value of their users, that means they can acquire less, thus the drop in DAU.
The key equation for a free-to-play business is LTV > Acquisition. Unfortunately, CPI for FB probably somewhere around $1 and on iOS it can be $1-$5 depending on who's buying the traffic that day. This is why the social game market is difficult to survive in, because most small companies don't have the marketing spend to acquire customers at that cost. For Zynga, these costs are starting to show in reduced DAU, due to a combination of natural declining retention and an increase in acquisition costs.
The real question is the value of their users, and whether Zynga can increase that value. Zynga's largest expense is probably marketing and CPI costs have more than likely doubled (I don't know the exact numbers) on Facebook over the past couple years. If Zynga hasn't increased the value of their users, that means they can acquire less, thus the drop in DAU.
The key equation for a free-to-play business is LTV > Acquisition. Unfortunately, CPI for FB probably somewhere around $1 and on iOS it can be $1-$5 depending on who's buying the traffic that day. This is why the social game market is difficult to survive in, because most small companies don't have the marketing spend to acquire customers at that cost. For Zynga, these costs are starting to show in reduced DAU, due to a combination of natural declining retention and an increase in acquisition costs.
In other news, it's summertime in the US and school just let out. People are using their casual time differently at this time of year.
Rumor has it that the insider lock-up is tomorrow, which doesn't help as it's being discounted.
http://www.nasdaq.com/markets/ipos/company/zynga-inc-782377-...
http://www.nasdaq.com/markets/ipos/company/zynga-inc-782377-...
if anyone cares:
- apparently 6/13 is not the actual lock-up expiry: http://techcrunch.com/2012/03/14/zynga-lockup-secondary-offe...
- this seems to be behind today's sell-off: http://blogs.sacbee.com/capitolalertlatest/2012/06/californi...
- apparently 6/13 is not the actual lock-up expiry: http://techcrunch.com/2012/03/14/zynga-lockup-secondary-offe...
- this seems to be behind today's sell-off: http://blogs.sacbee.com/capitolalertlatest/2012/06/californi...
The performance of all these stocks would seem to be a huge argument against the idea that we're in a bubble, a favorite topic around these parts. Bubbles don't look like this.
All of the sane discussion of recent bubbles that I've seen here and elsewhere has been careful to narrowly pinpoint the bubble activity to company valuations as defined by VC and other early-stage funding, not the market cap of public companies or the overall economy.
"Company valuations as defined by VC" won't float free of stock market performance for very long. I'm specifically referring to the last few big-name tech IPOs, none of which have been even remotely performing like a bubble surfer.
The lack of inspiration, willingness or innovation on Zynga's part is still baffling.
My reaction to this:
Good.
Good.
Can we have Brian Reynolds back now, please?
http://en.wikipedia.org/wiki/Brian_Reynolds_(game_designer)
http://en.wikipedia.org/wiki/Brian_Reynolds_(game_designer)
http://www.wolframalpha.com/input/?i=znga+vs+fb
Some nice charts...
Some nice charts...
Any inclination to play Draw Something was removed when it started asking me for extra Facebook permissions.
So major FB source of revenue is collapsing, but FB shares go up? Too much coke on Wall St.
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ZNGA's current market cap is $3.5B. But it has about $1.2B in cash, and little debt. Regardless of how you feel the games, they do have a real business, so if Instagram is worth $1B to Facebook, ZNGA must be worth somewhere north of $2.5B, its current enterprise value.