Facebook’s first quarterly earnings since their ill-fated IPO are due out tonight. Shares are already down over 20% in what one newspaper described as ‘the worst IPO in a decade’. Not exactly true…
Zynga and Facebook are closely connected. Almost all plays of Farmville etc are via Facebook. Zynga was an IPO at $10 a share in Dec 11. Last night they really spooked the market. Although they rep
orted revenues up 19% YOY at $332m, they also reported a loss of $22.8m. The stock tanked by another 40% to $3.18- so they are down c70% since the IPO.
Zynga is the ultimate fad. Users are clearly get fed up with the ‘old’ games quite quicklyand need ‘fresh blood’ all the time. Getting a first time hit is difficult enough. Repeating it every few months is nigh impossible. On top of that their users are moving to mobile (Farmville is better on a full-sized screen) and Facebook keeps changing the way it interacts with its third party suppliers.
On the other hand, without Zynga I wouldn’t have come up with my best ever HotViews headline – Money for nothing but the chicks ain’t free. That was when paying real money for virtual goods was all the rage. Looks like even dedicated Farmville fans have decided that, in these straightened economic times, maybe saving the dollars for real food is rather better than spending it on virtual chickens.
All this does not bode well for Facebook.