Zynga: Hey, IPOs Are Expensive

CEO Mark Pincus with Zynga game board.

Image: Zynga

Zynga's stock price took a brief jump following the release of the online gaming company's fourth-quarter report last night, but gains quickly disappeared after investors actually read the report.

The culprit for the disappointing numbers? According to Zynga, the costs of going public and stock-compensation expenses ate into its quarterly revenues, which totaled $311 million, a 59 percent jump over the previous year's final quarter. But during the fourth quarter last year, when the company was still private, it posted earnings of $16.1 million. This year, it lost $435 million.

In spite of the net loss, a 59 percent jump in revenue is nothing to shrug away, the company says, with Zynga CEO Marc Pincus trying to put a bright face on the news with this statement: “Zynga set new records in the year in terms of audience size, revenues, and bookings,” including an increase of 45 million monthly active users.

In spite of the dismal report, Zynga still expects to report adjusted earnings of 24 cents to 28 cents per share over 2012, above analyst estimates that put the stock at 23 cents per share on the year.

According to a report by Forbes, a series of analysts representing influential firms including Barclays, Evercore, Bank of America, and Baird have downgraded Zynga's stock after seeing the numbers.

The company was trading at $12.45, down $1.87, or 13 percent, this morning.