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Home News [UPDATED] Zynga Execs Dumped Stock Before 41% Drop

GAMING NEWS

[UPDATED] Zynga Execs Dumped Stock Before 41% Drop

Posted on Friday, July 27 @ 11:20:00 Eastern by


[Update]: Several class-action law firms have announced investigations into the stock crash and early sale by Zynga execs. Schubert Jonckheer & Kolbe, Newman Ferrara, Johnson & Weaver, Wohl and Fruchter, and Levi & Korsinsky will be looking into the situation.

All of these firms regularly conduct class-action lawsuits against corporations. Levin & Korsinsky recently brought a lawsuit against THQ over the failure of the uDraw tablet while Schubert Jonckheer & Kolbe have won suits against publishers like EA and Sony in the past.

[Original Story]: Following yesterday's 41% dive, Zynga stock sold today for as low as $3.17 a share. That's far lower than the price Zynga CEO Mark Pincus sold his stock for.

Yahoo news is reporting that Pincus sold $200 million worth of Zynga stock in April, joining Zynga's CFO, COO, and General Counsel in reaping millions. Combined, the executives sold 43 million shares of stock at $12 a share for $516 million.

Five hundred sixteen million dollars. 

Zynga is the developer of Words with Friends, FarmVille, and the purchasers and purveyors of failures like Draw Something.

Which is funny. Zynga's bloated IPO brought millions of dollars in. Draw Something was quite inflated as well, before Zynga spent $210 million on it. Let's hope the morons running the company get shafted just as equally in this situation.
Related Games:   Draw Something, Words With Friends
Tags:   zynga


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Comments
  • sliverstorm
    sliverstorm
    Joined: Jun 2007
    Posted: Jul 26th, 2012 at 4:42 pm
    The Zynga situation is a great example of overvaluing first-mover advantage. Everyone looked at their growth numbers without considering that they were the only game in town. Groupon is in a similar situation, IMO.
    0 1
  • danielrbischoff
    danielrbischoff
    Joined: Nov 2009
    Posted: Jul 26th, 2012 at 6:31 pm
    Definitely, but at least there are other companies positioning themselves to compete with GroupOn (Amazon Local etc).
    0 0
  • sliverstorm
    sliverstorm
    Joined: Jun 2007
    Posted: Jul 26th, 2012 at 7:13 pm
    I agree--that's basically what I'm saying. I think that google deals and amazon local are going to come in and basically eat Groupon's lunch, in the same way that the many, many new competitors in the mobile/casual game space are chipping away at Zynga. Both companies had a run in blue ocean markets, and everyone seems to have assumed things would stay that way without really giving much consideration to the inevitable waves of competition that would follow.
    0 0
  • danielrbischoff
    danielrbischoff
    Joined: Nov 2009
    Posted: Jul 26th, 2012 at 11:30 pm
    What I can't get past is the number of people that stupidly bought this stock. Didn't they set records for an IPO?
    0 0
  • Nick_Tan
    Nick_Tan
    Joined: Jul 2006
    Posted: Jul 27th, 2012 at 7:04 am
    That is, unless you purchase the stock with the purpose of shorting it. :)
    0 0
  • 213EDD
    213EDD
    Joined: Sep 2007
    Posted: Jul 26th, 2012 at 4:53 pm
    This is evidence that their video game model does not work. This is a good thing.
    0 3
  • friggest
    friggest
    Joined: Mar 2008
    Posted: Jul 26th, 2012 at 5:43 pm
    You shouldnt judge on company or industry on its growth ability. Tech stocks of the 90's anyone? Its called value investing. And with a poon like myself who is too afraid to buy individual stock, Ill stick with index funds.
    0 1
  • Icepick
    Icepick
    Joined: Dec 2002
    Posted: Jul 26th, 2012 at 6:34 pm
    I don't know much about stocks or investing, or even the economy so if I'm wrong could someone point it out, but wouldn't this have been foreseeable, given the poor performance of facebooks stock, and if looking at it like that, wouldn't a person of moderate intelligence seen this coming given Zynga's close relationship with facebook? I would figure you'd sell the stock, I don't know if it's because of the company ownership that taints this, but if you own the company, that makes this shady? When would they of been able to sell the stock? After it crashed? I just see it as a smart business move as opposed to shady practice, but again, I'm fairly ignorant to all this.
    0 0
  • danielrbischoff
    danielrbischoff
    Joined: Nov 2009
    Posted: Jul 26th, 2012 at 6:54 pm
    41% is a pretty huge drop for ANY stock. After something like that happens, people start looking around for foul play, especially if they owned any of said stock. I can't say if the execs did anything illegal or not, but I can say that everyone involved in Zynga is stupid.
    0 0
  • pennpsu
    pennpsu
    Joined: Sep 2010
    Posted: Jul 28th, 2012 at 2:14 pm
    If these sales were based on information not available to the public it is illegal. These types of firesales by company officers are always subject to scrutiny, especially if the majority of outstanding shareholders held their shares and took the loses. Almost always points to insider trading.
    0 0
  • danielrbischoff
    danielrbischoff
    Joined: Nov 2009
    Posted: Jul 28th, 2012 at 4:09 pm
    Thanks for the help. I'm not as well versed as I'd like to be, but the suspicion was definitely there.
    0 0
  • Jobin_Wendy
    Jobin_Wendy
    Joined: Mar 2012
    Posted: Jul 26th, 2012 at 6:45 pm
    I kind of liked Draw Something. Although, now that I think about it, it was just a method of sharing crudely drawn dicks with people on the other side of the world (or - if you're like me and my friends after too many beers - the other side of the room).
    0 0
  • danielrbischoff
    danielrbischoff
    Joined: Nov 2009
    Posted: Jul 26th, 2012 at 6:55 pm
    Draw Something was fun, but to pay $210M for the company behind the fad, it was quite inflated.

    And thank God I didn't get matched up with you.
    0 1
  • Jobin_Wendy
    Jobin_Wendy
    Joined: Mar 2012
    Posted: Jul 29th, 2012 at 3:02 pm
    Considering I pretty much remembered it existed only after several beers, many of my drawings were dicks or vaginas or some combination of both. And yes, $210M was a ridiculous price, even given its popularity. I don't understand how micro transactions could have covered those costs and then turned a profit, ever.
    0 0
  • De-Ting
    De-Ting
    Joined: Nov 2006
    Posted: Jul 26th, 2012 at 11:25 pm
    Draw Something was fun until the exact moment that Zynga bought it.
    0 2
  • Nick_Tan
    Nick_Tan
    Joined: Jul 2006
    Posted: Jul 27th, 2012 at 1:27 pm
    Not sure what the investigation will cover other than the fact that the CEO pretty much knew that Zynga's worth was bloated.
    0 1

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