Return Of Mark Pincus As Zynga CEO Sends Share Price Crashing
Our loyal readers know all too well the roller coaster ride of the once king of social games, Zynga. Their meteoric rise at the time of their much hyped IPO in 2011 and their equally dramatic fall have led to many analysts pulling out their hair.
Just when you thought things could not get any worse Zynga announced the “letting go” of the current CEO Don Mattrick. While this is not such a shock, the fact that the replacement is no other than their former CEO and Founder Mark Pincus has set their stock price tanking by nearly 18 percent and trading around $2.38. This of course is a world away from their $10 IPO share price in December 2011.
This represents one of the biggest drops in the last 2 years as investors show what they think of a failed CEO returning to the helm. The lack of confidence the market has shown in Pincus is precisely the reason that he excused himself.
Don Mattrick replaced Pincus in 2013 and he has since take drastic steps in an effort to get Zynga back to the top of their game. This included mass layoffs, major refocusing on social games and of course the withdrawal from real money gaming. Pincus will have to convince investors that he has some aces up his sleeve that he never had at the time he stepped down in 2013. As we have discussed in details Pincus has been forced to acknowledge that his main mistake was not focusing enough on mobile and relying too much on their partnership with Facebook.
Adding to the mess Zynga are in, it was confirmed that the Head of Zynga Studios, Alex Garden had left the company in March which was not formally announced at the time. According to a Zynga spokesperson the departure was a “mutual decision”.
No need to feel sorry for Mattrick as it is reported that he will walk away with up to $15 million with his severance pack according to a filing with the Securities and Exchange Commission. Pincus has already pledged to continue their mobile drive with new titles like Empires & Allies and Dawn of Titians.
It remains to be seen if this latest restructuring is the final nail in Zynga’s coffin or perhaps one of the boldest comebacks in recent years. All eyes will be on Pincus on May 7 when he is scheduled to address investors at the release of their Q1 earnings report.