Zynga’s stock is down 20% this morning after it lowered its financial outlook.
The once-hot social gaming company said it lost $100 million last quarter, and it’s going to have lower than expected bookings for the year.
This is the most spectacular flame out of a high profile Silicon Valley company in a long time. The company’s market cap is down to $1.71 billion. It has over a billion in cash on hand, which means its business is really being valued at ~710 million. When it started the process to go public last year, reports trickled out that it was looking for a $20 billion valuation.
Zynga has been crushed because it failed to produce new hit games people love.
A few years ago, people thought Zynga had cracked a new formula for gaming companies by making social games for the Facebook audience. It turns out Zynga has the same problems as any games maker. It’s a hit driven business. And it hasn’t had a hit in a while.