SAN FRANCISCO – The struggles continue at Zynga (NASDAQ:ZNGA) as the shares of the company best known for Farmville has been fallen more than 15 percent in the last six months. To make matters worse, the company continues to lose ground to competitors who have embraced the rise of mobile gaming.
Furthermore, the company has not had a hit game in a long time, and this decline has decimated its user base. In the past, Zynga was able to promote new releases on popular games, but with fewer hits, the number opportunities to promote have fallen as a result, new games are not gaining any traction. Beyond this, the company has gone through several management changes and has cut back its work force.
All the while King, the creator of Candy Crush, just passed Zynga as the largest platform on Facebook (NASDAQ:FB) and Rovio, creator of Angry Birds, has more than a quarter billion active users and is planning a IPO for later this year. More competition is coming as GameStop (NYSE:GME), Disney (NYSE:DIS), and Electronic Arts (NASDAQ:EA), the owner of Plants vs. Zombies, are all planning new releases for mobile and consoles.
The news gets worse, as Take-Two Interactive Software, Inc. (NASDAQ:TTWO) with release Grand Theft Auto V and Activision (NASDAQ:ATVI) is planning to release their latest version of Call of Duty – both games are primed to do when during the critical holiday season.
While Zynga appeared to have sufficient cash to stay afloat until early next year, little has changed since the end of July, and it is quite likely that the company will announce another 40 percent reduction in monthly users when it releases results for the current quarter next month. New CEO Don Mattrick had hinted that changes were in store for the company, but it increasingly appears unlikely that he will be able to restore the company fortunes in time.
Shares in Zynga were up nearly 3 percent in heavy trading as the popularity of the March 4 option call surged – more than 6,000 contracts have been sold, including two 1,000-lots, with a volume weighted average price (VWAP) of $ 0.21.