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Zynga’s Q4 Results For 2013 Sees Share Price Soar

Mark Twain’s phrase “Lies. Damned lies, and statistics” sums up the market response to social gaming giant Zynga’s fourth quarter results for 2013. As reported the woes of Zynga has seen them on one hell of a roller coaster ride and one never knows what is coming next.

Anyone looking at the Q4 results would think that they put another nail in Zynga’s coffin. Revenue for the quarter was $176 million which is a drop of 43% from 2012. Added to that are the number of active players which have gone down drastically from 2012. The monthly active users were down to 112 million million for the quarter which is less than half of the 298 MAU’s in the same quarter from 2012. Zynga reported a $25 million net loss for the quarter which was an improvement on the $49 million for Q4 in 2012.

In terms of the whole of 2013, revenues fell by 32% to $873.2m with online game revenues down 34%, ad revenues down 17%, bookings down 38% to $716m. Another “positive” number was net losses which were $37m which improves on the $209.4m in 2012.

Zynga expect Q1 revenues results for 2014 to be between $155m to $165m with net losses projected between $49m and $56m. Their cost cutting measures will continue in 2014 with a planned 15% workforce cut which will save around $34m. Zynga also announced their plans to acquire mobile game developer Natural Motion for $527 million.

Now comes the funny part as despite these not so flattering numbers Zynga’s share price was up 23% to be trading around the $4.38 range.
After reading the figures and seeing the stock price soar one gets an idea why so many people are skeptical about statistics and numbers. There is only one explanation for such a market reaction and that is many believed that Zynga’s woes would not end and even worsen. The very fact that their losses were less than catastrophic actually gave investors’ confidence in the former gaming giant. We can only sit on the side and see what lies in wait for Zynga in 2014. Could it be the year of their demise or the year they rise from the ashes and return to the $10 share price of their IPO launch.

For what it’s worth Zynga’s chief executive Don Mattrick seems optimistic,” We finished 2013 in a strong position and expect 2014 to be a growth year. We believe that Q1 2014 will be a solid foundation for that growth and we expect substantial improvements for the remainder of the year across audience, bookings, and adjusted EBITDA. Our market is growing as measured by device, audience, and dollars, and we have the privilege to compete in one of the fastest growing parts of the entertainment industry. We have an ambitious agenda and we are moving quickly to add capabilities that are complementary and strategic to our core growth plans.”

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