Zynga shares zoom up, cost-cutting measures continue

will-a-nevada-license-help-zyngaGood news and bad news for the people at Zynga today.

First, the good news.

With Nevada having legalized real-money gambling over the Internet, the world’s biggest online social games maker saw its shares zoom up by 15 percent to $3.67 at 10:08 a.m. in New York, the most the shares have increased in one day since, well, two weeks ago.

It’s no secret that Zynga has tied its entire fortunes into the world of online gambling and it figures that with rapid developments in the US’ state-level gambling market, the company’s shares are picking up some steam. They’ve gradually gotten better, at least a whole lot more than late last year when it hit a six-month low of $2.12. But since then, Zynga’s stocks have steadily rebounded, albeit still a long ways away from when it first opened at $10 per share in 2011.

But steady improvement is always a silver lining and with Nevada having legalized online gambling in the state last week, Zynga has reason to be optimistic, particularly in light of the new revenue opportunity that Nevada has opened up. Financial analysts have also been quick to point out the positive effects of a new market, such as Nevada’s online gambling market, opening up. BMO Capital Markets analyst Edward Williams said as much when he told Bloomberg’s Karl Baker about the ramifications of Nevada legalizing online gambling in its borders. “As states legalize some form of online gaming, you’re likely going to see Zynga positively impacted,” Williams said. “Revenue from Web-based betting will probably measure “in the billions.”

Now, the bad news.

Despite the recent surge in share prices, Zynga’s cost-cutting measures aren’t close to slowing down anytime soon with the latest casualty Baltimore studio, which effectively closed today as part of the company’s cost-cutting measures. In addition to the Baltimore studio, three other locations will be consolidated, including two studios in Austin, Texas, another two in New York City joining forces, and the company’s studio in McKinney Texas, heading to Dallas. As a result of these moves, it’s been estimated that around 30 individuals of varying capacities within the company are now out of a job.

Zynga’s chief operations officer David Ko commented on the re-structuring telling GamesBeat that “while these decisions are always difficult, these steps will affect approximately 1 percent of our workforce and enable us to focus our resources on the most significant growth opportunities.”

One of which is Nevada.