Zynga’s stock tanks again

It’s another bad day for Zynga.

The company’s stock price tumbled Monday after it announced that the head of its Chinese operations is leaving Zynga at the end of the month. Also possibly weighing on the company’s shares: TheStreet Ratings, a service provided by financial news site TheStreet.com, downgraded Zynga from a hold to a sell.

In recent trading, Zynga’s shares were off 15 cents, or 5.5 percent, to $2.56. Earlier in the session, the company’s stock was down to as low as $2.50, off 21 cents, or 7.7 percent.

The stock’s fall follows a similar plunge on Friday that came in the wake of a similar analyst downgrade, that time from Morgan Stanley.

According to a report in the Wall Street Journal, Zynga’s China head, Andy Tian, is leaving “to return to his entrepreneurial roots,” according to the company. Tian had been general manager of Zynga’s Chinese operations for three years, since the social gaming company acquired XPD Media, a company he founded.

Tian will be succeeded by John Yin, formerly a studio director for Zynga’s Chinese operations. Yin previously worked as an executive producer at Electronic Arts.

In Zynga’s most recent fiscal year, 40 percent of its revenue came from outside the United States, although no individual non-U.S. country accounted for more than 10 percent of its total sales.

TheStreet Ratings’ downgrade of Zynga cited the company’s declining operating cash flow, its declining revenue and its low return on equity compared with peer companies.

Despite the stock’s sharp decline over the last year, “We feel the stock is still not a good buy right now,” the ratings service said in its report.

The report echoed the opinion of Scott Devitt of Morgan Stanley, who downgraded Zynga shares to “underweight” on Friday.

Zynga has seen its shares plunge over the last year amid numerous executive departures, disappointing earnings reports and declining sales. The company has announced two mass layoffs in the last year, including an 18 percent cut in staff earlier this month.

 

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