Game Over? Zynga Abandons Online Gambling, User Numbers Plunge

Joe Goldman |

Zynga (ZNGA)  reported on Thursday a 31 percent drop in revenue and a 39 percent decrease in monthly active users for the second quarter of 2013. The social gaming company also abandoned its pursuit of real money gaming, which sent shares plummeting during after-hours trading.

Zynga’s profit swung to a loss for the quarter, reporting a non-GAAP net loss of $6.13 million or -$0.01 per share, versus the $4.56 million profit or $0.01 per share from the same period a year ago. Revenue for the quarter was $231 million, a 31 percent decrease from the previous year. Analysts were expecting a $0.04 loss, so the quarter was financially somewhat better than expected.

The big surprise of the day, however, was Zynga’s decision to ditch online gambling to focus on fixing its social and free gaming business.

“Zynga believes its biggest opportunity is to focus on free to play social games. While the company continues to evaluate its real money gaming products in the United Kingdom, Zynga is making the focused choice not to pursue a license for real money gaming in the United States,” read Zynga’s press release.

Investors were shocked and disappointed at this announcement because the U.S. gambling market could be worth up to $380 billion, according to Yahoo! finance. As a leader in online gaming, Zynga was expected to become a leader in real money play and seize a sizable piece of this market.

“The decision we made around [real money gaming] really centered around focus. As we looked at the social gaming and free-to-play opportunities, which continues to grow, we’re not executing against that. Really, it just centers around focus,” said David Ko, Zynga’s Chief Operations Officer.

In other news surrounding the earnings report, Zynga released six new titles during the second quarter and currently owns three of the ten most popular games on Facebook (FB) . However, monthly active users plunged 39 percent year-over-year, a shockingly poor number in terms of traffic.

“We’re missing out on the platform growth that Apple, Google, and Facebook are seeing. In short, we can do better,” said newly appointed CEO Mattrick during the conference call, who claimed that Zynga has struggled with business fundamentals over the last year. “We anticipate two to four quarters of volatility as we work through resetting and developing our strategy for growing top line revenue and profit.”

Shares plunged over 15 percent to below $3 as investors booed Zynga’s soft user numbers and decision to shy away from the multi-billion dollar gambling industry.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
FB Facebook Inc. 183.29 4.30 2.40 19,007,288 Trade
ZNGA Zynga Inc. 3.60 0.08 2.27 11,305,371 Trade
PRCF Protein Reactor Combined 0.00 0.00 0.00 0


Emerging Growth

MGX Minerals Inc.

MGX Minerals is a diversified Canadian mining company listed on the Canadian Securities Exchange. MGX is engaged in the acquisition and development of industrial mineral deposits in western Canada that…

Private Markets

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…


Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…