february 15, 2012
Facebook game star Zynga on Tuesday saw its stock market price sink after its first earnings report as a public company showed employee stock compensation turned profit into loss by the end of 2011.
The San Francisco firm's revenue last year nearly doubled to $1.14 billion but the profit on the books at the end of the third quarter was wiped out by a $435 million loss posted in the final three months of the year.
Zynga ended the year with a net loss of $404.3 million, which included more than half-billion dollars in stock compensation workers earned instead of cash at the startup.
Zynga stock price dropped more than five percent to $13.53 a share in after-hours trading that followed release of the earnings figures.
Zynga jumped into the stock market with a billion-dollar listing in December.
Offering 100 million shares -- one-seventh of the company's total -- at $10 a pop, the maker of Facebook games FarmVille, Zynga Poker and Words With Friends was valued at a whopping $7 billion.
Zynga's entrance was the largest Internet IPO offering since Google went public in 2004, surpassing online bargain service Groupon, which raised $700 million when it went public last year.
Despite concerns by some analysts that new Internet stars are being precariously overvalued, Zynga's stock was snapped up quickly.
Zynga games are free to play but the company makes money by selling virtual in-game goods to players and serving up advertising.
The games developer boasts around 240 million players per month in 175 countries, dwarfing its social gaming competitors.
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ReplyDeleteZynga creates the most playable games in Facebook. I wouldn't have a shred of doubt if claim they rake in $7 billion dollars in a year. I actually played poker, and they did make me buy their poker chips via Paypal.
ReplyDeleteLauren Edith