Zynga Inc., the biggest maker of games played on Facebook Inc.’s social-networking site, fell to a record low after analysts at Cowen & Co. said usage declined last month as players switched to mobile devices.
Shares of San Francisco-based Zynga decreased 10 percent to $4.98 at the close in New York, the lowest price since the company sold shares at $10 apiece in an initial public offering in December. Through yesterday, the stock had dropped 41 percent this year.
Daily active use for Zynga’s social gaming dropped 8.2 percent in May, said Doug Creutz, an analyst at Cowen in San Francisco, in a report today. Facebook accounts for most of sales and takes a cut of virtual goods sold in Zynga games, such as crops and tractor equipment in “Farmville.” While Zynga is the dominant provider of games on Facebook, it faces significantly more competition on smartphones and tablets.
“Consumer preferences may be switching decisively to mobile games given that quality is similar, if not better, and mobile games have the added advantage of being playable at any time, anywhere,” said Creutz, who has a neutral rating on Zynga’s shares and a price estimate of $5.55. “Mobile devices may be siphoning off an accelerating number of gamers from Facebook.”
Facebook, based in Menlo Park, California, has said its revenue may be negatively affected by users accessing the site on mobile devices rather than personal computers, since the company’s ability to make money off mobile users is unproven.