Zynga plunged to the lowest price in more than a year after the online game company posted quarterly results at the low end of its forecast and cut its full-year outlook following the decision to delay new games.
The stock declined 3.3% to $2.83 at 9:36 a.m. in New York, after dropping as low as $2.71, the lowest intraday price since June 28, 2013. The San Francisco-based company reported a break-even second quarter and revised its guidance for 2014. The shares had dropped 23% this year through yesterday.
Zynga, once the leader in casual play with titles such as FarmVille, is postponing some new games including poker and Words With Friends to the second half of this year and 2015 for additional work as the company transitions to more mobile play from online. The company also announced deals for games with the NFL, Tiger Woods and Warner Bros.
"I feel like we're making progress," CEO Don Mattrick, who's led the company for a year, said in a telephone interview. "We're doing the heavy lifting right now, and the heavy lifting is investment and being disciplined and finding the right balance of shift dates."
Zynga broke even in the last quarter, excluding items, according to a statement yesterday. That compared with an April forecast of break-even to profit of 1 cent a share. Bookings, the value of virtual goods sold during the quarter, fell 6.7% to $175.1 million, hitting the low end of a forecast that ranged up to $195 million.
"The bookings were certainly lighter than expected, as well as the outlook," said James Cakmak, an analyst with Telsey Advisory Group in New York, which doesn't rate stocks.
Zynga also said it's entering the sports category after obtaining licenses from the National Football League and Tiger Woods. It introduced NFL Showdown on a limited basis yesterday and a Tiger Woods game may be available in 2015. The company also signed a deal with Warner Bros. to create a Looney Tunes game that will be introduced before the holiday season.
Mattrick has been hiring to revitalize Zynga's products and marketing. The team is restructuring the company's offerings as its well-known FarmVille, Zynga Poker and Words With Friends games face competition from new products such as Glu Mobile Inc.'s Kim Kardashian: Hollywood mobile game and King Digital Entertainment's Candy Crush titles.
"We're at a time of transition and we're being purposeful about making good choices," Mr. Mattrick said.
With the game delays and new investments, Zynga forecasts 2014 bookings of $695 million to $725 million, down from as much as $810 million projected in April. The company anticipates profit, or adjusted earnings before interest, taxes, depreciation and amortization, of $40 million to $60 million, less than the high of $100 million seen previously.