Zynga’s UK Online Gambling Venture Fails to Sustain Boost as Stock Prices Plummet
The launching of Zynga’s online gambling venture in UK earlier this month, held a promise of boosting Zynga’s stock prices. However, online casinos in the UK are a dime a dozen, so to speak, and Zynga’s entry did not create the much needed impact. On the contrary, the number of Zynga Facebook users declined sharply by as much as 25 percent, which dampened the company’s long-term projection. This included the social gaming company’s bid to enter the U.S. Internet gambling industry by offering real-money online poker and online casino games.
The rise in Zynga’s stock prices this month is one that traders would hardly call a boost, as post-launching price per share went up to $3.55 from a previous $3.45. Still, the past weeks saw Zynga’s stocks continue to perform poorly as NASDAQ’s closing prices for Zynga fluctuated; as of this writing, Zynga stocks closed at only $3.13.
The social gaming company’s first quarter profit report did not help either, as it disclosed that investors stand to receive only 1-cent per share. Zynga officials gave emphasis that the financial reports still does not include Zynga’s UK online operation. Albeit, CEO Mark Pincus cited 2013 as a year of transition and that the company still expects to lose as much as three to four cents per share by the second quarter.
Analysts believe that Zynga’s troubles started when the company’s preferred deal with Facebook ended last March 31, 2013. Nonetheless, Zynga has an impressive balance sheet as it has no major creditors breathing down on its neck and is financially stable by having as much as $1.65 billion in cash. Many believe that Zynga can still hang on and survive, until it gets a piece of the online gambling business in the U.S. gambling states.