For Zynga, It's Not Game Over Yet

FORTUNE — Zynga was on top of the world 18 months ago, courting Wall Street’s crème-de-la-crème as it prepared to enter the public markets in one of the most highly anticipated IPOs in years. Venture capitalists, hedge funds, and even retail investors all scrambled for a piece of a company, which they were betting would deliver double-digit — possibly even triple-digit — returns. Those bets went up in smoke after going public as a flurry of missteps, missed earnings numbers, lawsuits, an exodus of senior executives, and other issues choked the company’s growth and caused its shares to lose more than 70% of their value.

Things got even worse last week when it drastically reduced in its 2012 outlook. Now shell-shocked investors are wondering how Zynga (ZNGA), the company behind such popular social games as FarmVille and CityVille, can turn its troubles around, with some wondering if a sale might be the most likely path forward. Zynga’s shares recently traded hands at $2.48 a share, a far cry from its all-time high of $15.91 set in March 2012 and IPO price of $10 in December 2011. “Does it make sense for some other company to look at Zynga? Definitely,” says Atul Bagga, a senior analyst at Lazard Capital Management. “There are a lot of companies that could benefit with Zynga’s expertise and credible platform.”

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