Zynga's second-quarter earnings report didn't go very well today, and now the stock is plummeting in after hours trading. It's having an interesting side effect, though: Facebook's stock is going down with it.
The biggest problem for Zynga was their revenue was about $11 million below what analysts expected, and they cut their expected revenue for 2012 from $1.47 billion to $1.15 billion. The news sent Zynga's stock into a free fall, eventually. Zynga finished the day $0.16 above where they started this morning, but the stock dropped by $1.96 in after hours trading. Their stock price is currently $3.12, far away from the $10 to $14 it commanded earlier in the year.
Revenue was down for a number of reasons. Games flopped, Facebook changed their algorithm, people realized spending money on tractors in Farmville was dumb. Despite being the main platform for their success, Zynga promptly blamed Facebook for their troubles:
“Facebook made a number of changes in the quarter,” John Schappert, chief operating officer, said in a conference call with analysts. “These changes favored new games. Our users did not remain as engaged and did not come back as often.”
If you want some nice "tech bubble" schadenfreude, we recommend Zynga's 6 month stock chart:
That doesn't even include the extra $2 after hour drop. Welp.
Facebook, presenting its first quarterly report since going public on Thursday, is getting taken to the cleaners in after hours trading, too. Facebook stock fell by $2.24 since the markets closed, which is a little over 7 percent of their stock price. They're going into arguably their biggest test since going public a full $10 dollars lower than their IPO price. Good luck!
This article is from the archive of our partner The Wire.