Zynga posts loss; Facebook investors worry

July 26, 2012

Zynga posted a loss Wednesday of $22.8 million for the quarter, cementing concerns about the company, which has seen player engagement and enthusiasm for its games decline in recent months.

Zynga shares opened at $3.06 in Thursday trading from a previous close of $5.08 — a far cry from its $10 IPO price.

The Farmville-maker said in an earnings call Wednesday that delays in launching some games contributed to the company’s losses. The social gaming giant was also forced to admit that its high-profile acquisition of OMGPop and its “Draw Something” game has yet to pay off. The game was a number-one app shortly after its release but has slipped out of the highest downloads lists on Apple’s iTunes and Google’s Play stores.

Part of that, the company said, is because of changes to Facebook’s Web platform, which has been directing users to newer games from other publishers.

But analysts have said that Zynga’s recent performance shows that consumers aren’t sold on the idea of buying virtual goods — a trend that could send ripples across the technology industry.

Zynga’s loss also prompted a drop in Facebook shares, with wary investors likely recalling that, at last count, Zynga itself accounted for 12 percent of Facebook’s total revenue.

Facebook posts its first earnings report as a public company Thursday amid concerns that it will also struggle to prove it knows how to make money off its 900 million users — who give their personal information to the site but use its services for free.

With earnings coming after the closing bell, Facebook shares opened at $27.75, down from a previous close of $29.34.

Related stories:

Zynga acquires OMGPop, maker of popular ‘Draw Something’ game

Facebook earnings: What to listen for

AP: Facebook less trusted with personal data than Amazon and Google, poll says

Hayley Tsukayama covers consumer technology for The Washington Post.
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