Zynga's stock fell by more than 20% in trading Friday morning to a new all-time low of $2.21 a share after the company cut its bookings forecast for the year and revealed that it will end up taking an impairment charge of between $85-$95 million on its purchase of Draw Something earlier this year.
[More from Mashable: Even in 1985, We Knew Facebook Was Possible]
Zynga's stock isn't the only one tanking on the news, though. Facebook shares also fell in after hours trading Thursday and went as low as $21.17 in early trading Friday, a decline of more than 3%.
For Facebook's shareholders, the big concern is that the social network will earn less revenue from Zynga games than had previously been expected. Doug Anmuth, an analyst with JP Morgan, cut his estimates for Facebook Payment revenue in 2013 to $582 million from $797 million based on Zynga's revised outlook. As of the beginning of this year, Zynga accounted for 12% of Facebook's revenue.
[More from Mashable: The Most Important Facebook Number: 140.3 Billion]
Zynga said in a statement Thursday that it expects revenue from bookings for the year to be in the range of $1.085 billion-$1.1 billion, down from its previous forecast of $1.15 billion-$1.225 billion, due to lower-than-expected demand for its online games.
This was supposed to be a big week for Facebook to appeal to investors, as the company's COO Sheryl Sandberg made her pitch to marketers at Advertising Week in New York, and Facebook announced that it hit the one billion user milestone. Instead, it looks like Facebook's stock will end the week below where it started.
As of publication, Facebook's stock was trading at around $21.40 a share. The stock opened the week at $22.08.
Image courtesy of Facebook, FarmVille
This story originally published on Mashable here.
- Investment & Company Information
- Arts & Entertainment