Several Zynga senior executives reportedly sold stock in the company ahead of its
unexpected $22.8 million net loss. Executives that sold stock include CEO Marc Pingus, CFO David Wehner, COO John Schappert, and general counsel Reginald Davis. In one quarter, Zynga stock fell from a high of $12 to a low of $2.97 per share.
Executives were not the only group to execute well-timed trades prior to the losses. Zynga investors Institutional Venture Partners sold 5.8 million shares for $70 million, Union Square Ventures sold 5.2 million shares for $62 million, and Google sold four million shares for $48 million.
Marc Pincus sold 16.5 million shares for $200 million, Hoffman sold 688,000 shares for $8.2 million, Werner sold 386,000 shares for $4.6 million, Schappert sold 322,000 shares for $3.9 million, and Davis unloaded 315,000 shares for $3.8 million. All the executives sold shares when the stock was at or near its peak price. The insider's dealings resulted in a market capitalization drop of $516 million shortly before the stock price tanked.
Zynga executives blame Facebook for the drop in traffic and revenues, saying that the social network made extensive changes that favored new games, mostly from Zynga's competitors. Regarding the user departure, Shappert said "Our users did not remain as engaged and did not come back as often."
The company has lowered earning expectations for the year to 4-9 cents per share, after having raised them to 23-29 cents per share at the end of its profitable first quarter and before the executives and investors partially cashed out. Zynga claims delays in launching new games, and an unpredictably quick decay of paid players in existing web games caused the precipitous drop in earnings this quarter.
Electronista has contacted Zynga for comment, and will update this article if we receive any information. [
via Yahoo]
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