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Zynga stock falls following new Facebook deal

November 30, 2012|By Ben Fritz
  • An amended agreement with Facebook sent Zynga stock down on Friday.
An amended agreement with Facebook sent Zynga stock down on Friday. (Paul Sakuma )

Shares in troubled Zynga fell another 4% Friday after the Web gaming giant revealed new terms with Facebook that led to investor concern it would lose preferential treatment on the world's No. 1 social network.

Under the terms of an amended agreement between the two companies, disclosed by Zynga late Thursday, Facebook is no longer prohibited from making its own Web games, ending its role as the special partner. The gaming company is now covered by Facebook's "standard terms of service."

The amended agreement also allows Zynga for the first time to offer games on other websites, including its own. It is also no longer obligated to display Facebook ad units or use Facebook credits as in-game currency.

That could help bring new players to the company, which has experienced slowing growth in many of its games this year, and seen others flop completely.

But investors were skeptical, concerned that the terms of the new deal could do more harm than good. Zynga shares were down 4% at $2.52 on Friday afternoon.

Both companies issued statements in an apparent effort to mitigate Wall Street's concerns.

"Our amended agreement with Facebook continues our long and successful partnership while also allowing us the flexibility to ensure the universal availability of our products and services," Zynga chief revenue officer Barry Cottle said, according to the Wall Street Journal.

"We're not in the business of building games and we have no plans to do so," added a Facebook spokesperson.

So far this year, Zynga stock is down 74%.

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