Zynga shares took a beating Wednesday, the first day of trading since the social gaming developer published its Q4 earnings report. Despite beating analysts’ expectations, the stock dropped 18% to $11.80, the biggest one-day drop in Zynga’s short history as a public company. Some investors didn’t like the fact that Zynga’s bookings – the cash earned from virtual goods sales – weren’t growing in proportion with the company’s overall user base. “Core game monetization is slowing more rapidly than expected,” says Macquaries Equities Research.
When other investors heard that the second half of the year would be Zynga’s stronger half, some decided things were going to get worse before they got better, so they chose to get off instead. Several analysts downgraded the stock, citing Thomson Reuters data that put Zynga trading at 67x forward earnings compared with a sector average of 12. So is it time for another viral marketing campaign, à la forcibly escorting Alec Baldwin off a plane for playing Words With Friends? Maybe Steven Baldwin lies down on a railway track, so engrossed in playing Dream Heights on his mobile that he ignores the oncoming train? Er, better not.
Better yet, have the company take another step down the road to online casino town. Zynga has announced its first licensed game deal, teaming with online game favorite Slingo to bring you (wait for it) Zynga Slingo. Despite the fact that Slingo is a 15-year, 50m download, 5b games played, cross-platform veteran, this incarnation will mark Slingo’s Facebook debut. The popular hybrid of slot machine and bingo has generated $1b from its players over the years, and 80% of Slingo.com’s 4m registered users are females who spend an average of 34 minutes per visit. (Seriously, baby, you had us at ‘hello’.)
Zynga is taking particular pains to distinguish between Zynga Slingo and its own just launched Zynga Bingo, because, really, who could possibly confuse those two? Zynga Slingo’s product manager Rich Sawel insists that the two games are both different and complementary. Sawel also said Zynga Slingo isn’t yet part of Zynga Casino, meaning the extra social ‘theme room’ aspects won’t be an option, but the company “will listen to the consumers” and act accordingly.
If Zynga’s “active conversations” with real money online gambling partners ever come to fruition, Slingo already has its real-money gambling bona fides, having successfully crossed over to brick and mortar casinos in the US with the help of International Game Technology. Venture Beat cited a company-sponsored survey of 25k players in Hackensack, New Jersey, which found that 21% of those who discovered the game online later played the game at a B&M casino in Atlantic City. See? Someone’s going to AC casinos!