Heard on the Street: Zynga’s damaged stock is unlikely to recover until it shows it can adapt to Apple’s iOS changes
before the report, but having them hit at the same time was painful. And the pain isn’t over quite yet: Zynga’s forecast for the third quarter called for net bookings to grow by only 5% year over year—its worst pace in five years. The company also trimmed its full-year bookings outlook by 3% to $2.8 billion.
Zynga’s share price slid 18% the following day—the stock’s worst single-day drop since its second quarter report in July of 2012. That date is an ominous one, as it was when the company first warned investors that changes by Facebook were hurting engagement in its social games. Given that Facebook games accounted for nearly all of Zynga’s revenue at the time, that warning marked the beginning of a serious crisis for the company.
The situation now doesn’t come close to that sort of crisis—even Zynga’s reduced forecast calls for 23% bookings growth this year. But some parallels are there. Zynga’s subsequent reorganization around mobile games has, but it still leaves the company somewhat vulnerable to the whims of tech titans that run the world’s dominant mobile platforms. And while Apple’s iOS powers only about 15% of smartphones sold globally each year, it is a far more lucrative platform than Google’s Android.
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