Zynga Inc. shares slumped after the company, a struggling maker of video games for mobile phones and tablets, said Chief Executive Officer Don Mattrick will leave, and founder and Chairman Mark Pincus will return as CEO.
The stock plunged as much as 15 percent to $2.46 as of 9:39 a.m. in New York, the biggest intraday decline since Feb. 13.
The changes in leadership are effective immediately, San Francisco-based Zynga said Wednesday in a statement. Mattrick, who has led the company since July 2013, will also leave the board.
Zynga faltered in efforts to revive revenue after once leading the market for games played on social media, such as Farmville. Sales last year declined 21 percent from 2013 and the company reported a loss of $226 million. Pincus controls a majority of the stock in the company, which he founded in 2007.
“He moved too deliberately and Pincus was too impatient,” said Michael Pachter, an analyst at Wedbush Securities in Los Angeles. It’s a “bad combination for career stability if the controlling shareholder thinks the CEO is taking too long to turn the ship around.”
“Mark is a visionary guy, and if he stays the course that Don put them on, I’m sure that the company will perform well,” Pachter said. “The share price reaction is a vote of no confidence in Pincus’ ability to stay the course, but he deserves the benefit of the doubt.”
Mattrick, 51, a former Microsoft Corp. executive, joined Zynga as game play was transitioning to mobile products such as smartphones and tablets, and failed to produce new titles to replace its aging hits. Sales shrank to $690 million last year from a peak of $1.28 billion in 2012.
King Digital Entertainment Plc, maker of the popular Candy Crush games, has emerged as the leader in mobile games, with revenue of $2.26 billion last year.
“Don joined us in a very important time in our evolution,” Pincus, 49, said in the statement. “The team’s hard work for our mobile players has resulted in bookings growing from 27 percent mobile bookings when Don joined to 60 percent by the end of last year.”
Mattrick will receive a $4 million severance payment, according to the company, and may get up to $1 million for a 2015 bonus. The company will also accelerate the vesting of 5.11 million shares granted to its former chief.
“I believe the timing is now right for me to leave as CEO and let Mark lead the company into its next chapter given his passion for the founding vision and his ability to couple our mobile progress with Zynga’s unique strengths,” Mattrick said in the statement.