The title says it all. Wall street now values the social gaming company essentially at nothing.
A very insightful post by Josh constine of Techcrunch.
You should go through it to know how Mark Pincus, CEO, Zynga lost $1 billion of his paper money in the aftermath of the IPO.
The 4 main reasons suggested by the author are Lack of softcore users, Not so cheap ads on Facebook, Game spam controls and Evolution of mobile.
Zynga, Groupon and Facebook are all trading at a fraction of their IPO value, and posting losses in the quarterly results, this is all because of the inflated values and the promise of continuos growth at the time of IPO.
The public market is going to value these companies correctly away from their lofty valuations, this is not a tech bubble at all, but a few companies with unrealistic valuations are going to get a correct valuation and the market will go on.
Is this an apocalypse for social media companies? No, but it also says that they didn’t live upto their promise of hyper growth and generating huge revenues and profits.