Stocks of Zynga
Inc(NASDAQ:ZNGA) dropped nearly by 3.50% on Wednesday after Piper Jaffray
estimated a decline in revenue for social gaming firms would take up pace next
year, with lesser teens showing interest.
Michael Olson, an
analyst, had downgraded the shares from ‘Overweight’ to ‘Neutral’. Piper
Jaffray has surveyed more than 7,700 teenagers and came to the conclusion that
their view of social gaming is more negative than it used to be before. Two
years back, 56% of teenagers had said that they would lessen their social
gaming time on websites like Facebook. This figure has increased to 90% ever
since, as per Olson.
Olson has also noted
that 60% of Zynga’s revenue comes from mature, waning games like Zynga Poker,
City Ville and Farm Ville. He is now predicting an 8% decline in revenue in the
upcoming year, as compared to the 2% reduction expected by most of the
analysts.
The online gaming firm
is trying to depend on Facebook games to games played on the smartphones.
However, investors are being pessimistic. The shares hit an all-time low on
Friday, at $2.21, after Zynga predicted a third-quarter loss. It is also taking
a charge associated with its March acquisition of mobile gaming firm OMGPop.
Piper Jaffray has also
noted some doubts on the potential success of City Ville 2, a sequel to its
huge hit City Ville that had attracted more than 10 million users daily. City
Ville 2 is essentially an updated 3D version of City Ville, however, it
experiences headwinds as Zynga’s Web-based games business is facing challenges.
Zynga’s strategy looks as if it still needs to be decided.
Shares of Yelp Inc(NYSE:YELP) fell 6.64% to $25.61
and Pandora Media Inc(NYSE:P) were down 3.50%
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