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Zynga shares dip as demand for Facebook games declines

Zynga shares have fallen more than 10% this week, as the social gaming company’s user numbers wane and investors worry that the craze for games on Facebook may have passed its peak.

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The Farmville creator said on Tuesday that it had expanded its mobile hit Draw Something to 12 additional languages to entice new users worldwide, but that announcement failed to arrest a steep sell-off as shares plunged below $5 for the first time.
The Nasdaq alerted traders that the stock had tripped a “circuit breaker” intended to stem precipitous drops in share prices.
Zynga’s slide came after analysts at Cowen and Co. published a report on Tuesday predicting that the market for games on Facebook was in an “accelerating user tailspin”.
“We believe that interest in Facebook-based gaming may have reached a negative inflection point,” Cowen and Co. analysts Doug Creutz and Jason Mueller wrote, “as more casual gamers migrate to mobile platforms”.
Zynga’s daily active users dropped 8.2% to 54.2 million in May, according toAppData.com, a website that tracks apps on Facebook and mobile platforms.
In March, Zynga acquired social game developer OMGPOP, maker of the wildly popular mobile game, “Draw Something,” along with 35 additional social games, for a price speculated to be between $200 million and $250 million.
The larger goal of the acquisition, besides bringing “Draw Something” into its fold, is to have OMGPOP build new mobile products for Zynga.
It has also continued to build games for Facebook’s mobile app, such as “ZyngaPoker Mobile Web,” “Words With Friends HTML5” and “Farmville Express.”

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