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Zynga Abandons Plans to Create Real Money Gaming Business in U.S.; Shares Tumble in After Hours Trading (ZNGA)

Shares of Zynga Inc. (NASDAQ: ZNGA) tumbled in afterhours trading on Thursday after the social gaming company said that it will drop its plan to create a real-money gaming business in the U.S. The company also reported its financial results for the second quarter.

In a statement, Zynga said, “While the company continues to evaluate its real money gaming products in the United Kingdom test, Zynga is making the focused choice not to pursue a license for real money gaming in the U.S.”

Following the announcement, ZNGA shares tumbled more than 18% in after-hours trading on Thursday.

Zynga investors have been pinning hopes on real-money gaming business as the company has failed to monetize its social gaming business. The company’s plan to enter real-money gaming business in the U.K. late last year had boosted shares. Investors were hoping that the gambling business would provide a boost to the company’s flagging business. However, with ZNGA shelving its plans to build a real-money gaming business in the U.S., it is not surprising that the stock has tumbled.

Don Mattrick, who recently took charge as Zynga’s CEO, said that the next few years will be a time of phenomenal growth in the social gaming space and the company has incredible assets to take advantage of the market opportunity, and to do that, the company needs to back to basics and take a longer term view on its products and business, develop more efficient processes and tighten up execution.

Meanwhile, for the second quarter of 2013, the San Francisco, California-based company reported revenue of $231 million, down 31% over the same period in the previous year. The company’s net loss for the quarter was $16 million, compared to $23 million reported for the same period in the previous year.


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