Zynga's Stock Crashes After Lowered Q3 Bookings Outlook ($ZNGA)

Here's an interesting bar chart of Zynga's quarterly bookings via Statista (and then ZNGA's stock chart since the IPO). After Zynga's lowered its outlook on Friday, $ZNGA made a new low on record volume. You have to wonder when capitulation sets in here. The stock respected the perfect downtrend line and crashed to $2.21, down from a high of $15.91 in March, before closing at $2.48. You can see on the chart that $2.67ish is now a new ceiling resistance level for the stock (w/ a tight sideways channel above), and there's a downtrend as well that traders and bots could fight again. There could be a pop in the stock at some point if it breaks those resistance levels, which could even try to fill that July gap. But you are still fighting data that is technically and fundamentally trending down.

Interesting out-of-the-money option activity occurred as well on Friday in November and December puts and calls: 2,289 November $2.0 puts traded with 101 contracts open (closed at 0.09, +0.04); 18,056 November $2.50 calls traded with 788 contracts open (closed at 0.27, -0.21); 6,189 December $2.50 calls traded with 2,118 open (closed at 0.32, -.20); and 8,300 December $2 puts traded with 3,512 open (closed at 0.12, +.04). As of Sep 14, 11.7% of the float was short via Yahoo Finance, but that was a while ago.

I remember Zynga's Draw Something app (via OMGPOP) was responsible for the stock's crash back in July (Zynga Crashes in After Hours Trading; Draw Something Expectations Lowered, July 25, 2012). Now they expect an "estimated impairment charge between $85 million and $95 million (excluding any income tax impact) related to the intangible assets previously acquired in connection with the company's purchase of OMGPOP." (press release) It's interesting to see these social media stocks crash after the huge IPO hype. But now I want to see how these social media companies turn themselves around. Read views by analysts in the articles below. Zynga has $1.2 billion in cash and $100 million in debt outstanding. It is worth $1.88 billion on the market at $2.48 per share (via Yahoo Finance)

Here is more info on Zynga's lowered outlook from Statista (see chart):

"Most worrisome though, is the fact that Zynga’s business appears to be shrinking: in Q3 2012, Zynga expects to collect $250 to $255 million from its users, a 13 percent decline over last year’s third quarter. Even in terms of revenue (which is smoothed by Zynga’s way of recognizing bookings as revenue over time), Zynga’s business shrank two percent compared to last year and almost ten percent compared to the June quarter."


Zynga stock sinks after lowered 2012 outlook (AP)
Should Mark Pincus Take Zynga Private? (All Things Digital)

source: Statista

source: StockCharts.com

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