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Zynga Stock Price Continues to Drop

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Posted by: Vito Gesualdi

 

Social gaming is perhaps one of the most lucrative markets to get into right now, with games like Angry Birds making obscene amounts of money. Just yesterday, social gaming juggernaut Zynga hit the public market, offering 100,000 shares at 10 bucks a pop. Unfortunately, the makers of Facebook stars like FarmVille and Mafia Wars have failed to ignite the market, with their shares falling to $9 apiece during today's trading.

Though the stock closed at $9.50, this is definitely not the reaction Zynga was hoping for. Analyists are split as to the reason for the lack of interest in the property, though many are speculating that the social gaming market is still too volitile to take a risk on. The Wall Street Journal talked with Morningstar Senior Equity Analysis Rick Summer, who put the stock's fair value at around $6 per share, citing concerns about the business model, which relies on inticing players to purchase virtual goods. Investors have also been soured by the poor performance of Free-to-Play gaming kings Nexon, whose stock has failed to perform in recent months.

Will social gaming prove to be the money maker its been hyped as? Or will we see something similar to the rise and fall of the dotcom bubble? Either way, FarmVille still sucks.

 

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