Zynga Stock Plummets After Announcing It Won’t Move Forward With Online Gambling


Zynga

Zynga, the San Francisco based online gaming company, has decided not to obtain the gambling license it would have needed to include casino style gaming played for real money.  It would have allowed the company to enjoy a new source of revenue it so desperately needs.  The announcement sent the stock plummeting $.60 or 17 percent to $2.90 before recovering slightly in afternoon trading.  At one time Zynga’s prospects were bright.  Early on, the company had the two most popular games on Facebook, “Mafia Wars” and “Farmville”.  But the problem with such stocks and companies, is that it’s far more difficult to stay on top than to rise to the top.  People get bored with games so the challenge is to continually make new and better games but that is so much more easily said than done.  No one really knows for sure what’s going to be hot or what’s going to be a bust.  Even proven entities such as Halo must continually update and re-invent itself or risk becoming stale and obsolete.  And that’s why the prospect of online gaming caused investors to perk up.  Gambling, like booze and sex will always be in style.  People love to gamble and online gambling is far from mature at this point. When Zynga made its announcement it deflated investor’s expectations.  How is it going to raise revenues? It needs new initiatives.  It still plans on testing an online gambling product in the UK.  But how long it can hold on simply by cutting staff and trimming costs?

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