A reporter from The Wall Street Journal wanted to drop by Zynga’s (NASDAQ: ZNGA) annual meeting of shareholders Tuesday at the Marriott Marquis hotel in downtown San Francisco. But instead of being able to get some clues as to what lies ahead for the company – struggling to make the leap to mobile platforms even as online gamers gradually wean themselves from their addiction to FarmVille – he was told he wasn’t allowed to listen in as CEO Mark Pincus outlined his future strategy to registered shareholders.
Whatever Pincus said seemed to work for a moment: the stock briefly bounced above its lows from Monday, when Zynga announced it would cut about 520 jobs, reducing staffing levels by 18 percent. But shares quickly resumed their descent, and the stock now hovers around $2.83, well below its $10 IPO price of only 18 months ago. Indeed, Zynga is turning into one of those companies whose market capitalization now languishes below the value of its assets: At this rate, it won’t be long before it’s trading for little more than the value of the cash on its books.
Still, it’s hard to argue that Zynga is a raging buy – we’d need to see some proof that Pincus and his remaining employees can pull off the transition to mobile and return to profitability with a strategy that goes beyond large-scale layoffs. Yet some analysts see decent value in Zynga’s beaten-down shares. In a note on Tuesday, Sean McGowan of Needham & Co. suggested that the stock’s valuation represents an opportunity for investors. “We would be buyers on weakness after this announcement,” McGowan wrote. So it might not be “game over” for Zynga investors just yet.