Zynga Shares Tumble After Trading Resumes: ‘Real Money’ Online Poker a White Knight

Following a halt in trading Friday, Zynga shares continued to tumble with trading once again available Monday, leading many to pray harder for real money online poker to surface in the US.

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The bad news comes on the heels of Facebook’s much ballyhooed and extremely disappointing IPO Friday. 

One of Facebook's biggest partners and creator of the world’s biggest online poker room (free-play poker), Zynga fell 13.4 percent Friday to its lowest closing price yet after trading resumed later that afternoon, then descended another 11.2 percent early in Monday's session.  There was a bit of a rebound later in the day, but by then the damage had already been done. 

Zynga’s closing day share price chart since the end of 2011, as drawn up by the Wall Street Journal, shows the sharp decrease. 

From the Journal: 

If the growth rate continues to slow, that would call into question Zynga's valuation. At $7.09, its shares trade 29% below their IPO price, yet Zynga still fetches a valuation of roughly 10 times 2012 earnings before interest, taxes, depreciation and amortization.

Some experts believe that Zynga could rebound in the next year with the potential for legalized online poker in the United States.  Zynga has already reportedly made overtures to existing “real money” Internet poker firms overseas. 

While the Facebook IPO has possibly weighed down on Zynga, Forbes.com contributor Tero Kuittinen suggests that a recent acquisition may be having far more crippling effects. 

There is little doubt that the proximate cause of Zynga’s share price dive during Friday and Monday has been Facebook’s star-crossed IPO. But bubbling under is a bigger problem – the continuing underperformance of “Draw Something”, the hugely popular mobile game created by OMGPOP. Zynga spent more than $200M on acquiring OMGPOP in late March – basically at the very peak of the game’s popularity.

Real money online poker seems like it would be a “win-win” for the company.  Already Zynga boasts 35 million active monthly users, poker players it has readily available at the onset.

- Aaron Goldstein, Gambling911.com