Zynga stock plummets, analyst says Facebook gaming losing steam
(CBS News) Zynga stock dropped by as much as 13 percent Tuesday, falling below $5 a share, the Wall Street Journal reports.
Zynga's portfolio is largely made up of browser-based games that are played in Facebook. Free games like FarmVille and CityVille earn revenue from in-game purchases.
A massive sell-off of the social gaming company's stock was sparked amid fears that Zynga's users have tapered off. According to Doug Creutz, analyst at Cowen & Co., Zynga gaming has dropped 8.2 percent.
Creutz believes that Facebook gaming "may have reached a negative inflection point."
"We believe that consumer preferences may be switching decisively to mobile games given that game quality is similar, if not better, and mobile games have the added advantage of being playable at any time, anywhere," Creutz said in a report.
Facebook's rocky transition into a public company may also contribute to investors' doubts over Zynga's future and profitability. After a much-hyped initial public offering (IPO), Facebook's shares have dropped from the $38 IPO price to about $27 per share.
Zynga launched in 2007 and went public in December 2011. The company reports 232 million monthly active users.
