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Zynga abandons real-money gaming, upsetting investors

July 27
11:55 AM 2013

Zynga planned to abandon its plans for real-money gaming in the US. Gambling with real money is illegal in the country. Thus, seeking a license would put the company in a bad light with regulators.

Although Zynga had all good intentions, investors did not feel it. Many who invested in the company believed in the potential of Zynga's proposition of real-money gaming. Now that the company was stepping out of this venture, these investors saw little reason, if any, to continue with the company.

As a result, the company's shares fell 16% at US$2.93 Friday morning at the Nasdaq. Almost 49 million shares traded hands by midday. This was double the 10-day average volume for Zynga's stocks. Three brokerages also cut the target price on Zynga shares.

The company will be facing a "year of volatility", according to Don Mattrick, Zynga chief executive. In addition, Mattrick stated that the company would get "back to basics". By this, he meant that the company would put emphasis on free-to-play games both on Apple's iOS and Google's Android platform. Of course, leading these free-to-play games would be Farmville.

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