zynga and the [potential] folly of relying on others
July 5th, 2011
Zynga is getting ready to IPO.
They’re the group that does “Farmville” and other games on facebook. The problem with their planned $1B IPO, though, is that they rely completely on facebook’s continued existence to make any of their earnings.
Last year their profits were in the neighborhood of $400M. That’s a lot of dough. But when facebook declines, or folks quit playing games on it, what will happen to the company?
Seems like a LOT of investors could get taken big time on this one – if they hold onto the stock the way you’re “supposed to” – as an investment, and not a short-term gamble.
