Zynga’s new platform causes stock to jump

Zynga’s stock definitely paid off today.

At the close of market, the company’s shares had climbed by nearly 10 percent, trading at $14.48 a share. That’s almost 50 percent higher than what shares were originally selling at when the company’s stock went public. For many traders, though, today’s reveal of Zynga.com made the company a much more solid investment.

Part of what’s made some people nervous about spending money on Zynga (outside of purchasing virtual goods, that is) is that the company relies so much on Facebook for its income. The new website provides social gamers an alternative to playing Zynga’s games exclusively on Facebook and relying solely on their  friends within the social network. On top of this, Zynga.com may provide the company with two additional sources of income: advertising and publishing third-party games.

Zynga’s stock didn’t quite take off like many investors hoped it would after the company’s December IPO, and the value has bounced up and down since then. Last month, Facebook filed for its own IPO and revealed that the game company accounted for 12 percent of its 2011 revenues alone; that little kernel of info caused Zynga’s market cap to climb by more than $1 billion in a day. Shortly afterwards, though, Zynga revealed underwhelming results during a quarterly earnings call and the share value slipped back down.

Of course, the long-term effects of Zynga’s new platform remains to be seen (especially since  the site’s ads aren’t active yet). People are betting that the company will be able to make a lot of money via these new revenue streams, but it’ll be a little while before we can tell if the new income is enough to keep the investors happy.

Publish date: March 1, 2012 https://stage.adweek.com/digital/zyngas-new-platform-causes-stock-to-jump/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT