Rumors suggest that Zynga (NASDAQ:
) CEO Mark Pincus might
take his company private
. This would be an interesting turn of events for the social game
continues to decline
. Regardless, it is unlikely to happen.
Never mind the analysts, who warn that by taking Zynga private
so quickly, the IPO could end up looking like a scam. Ignore the
posted on Zynga's official blog, in which Pincus attempts to
reassure his team and his investors that the company is not
in the toilet
The real reason why Pincus will not take his company private
is because the firm is
all but worthless
. It may try to stay relevant by signing
with Hasbro (NYSE:
) and other corporations, but this is the end of the line for
Zynga. The company has been hemorrhaging users (the company's MAU
) for years, and while Zynga still claims to have more than 300
million monthly active users, the company cannot figure out how
to turn a profit. This either proves that the free-to-play model
is broken or that Zynga's strategy has failed -- or both. In
either case, Zynga loses.
Still, Pincus does not have much to worry about. He just
an 11,500-square-foot home in San Francisco for $16 million in
July, after selling two other homes earlier in 2012. He could
have used that money to reinvest in the firm that inspired him to
every horrible thing in the book
, but it seems that he may have gotten everything he wanted out
of Zynga. Now the company is free to crumble.
This is not the first time that Pincus built a firm, took it
public, and let it sink.
has an interesting story about how Pincus founded Support.com
), which soared from $14 to more than $30 a share after its IPO.
The stock now trades just above $4. Sound familiar?
The only difference is that before tanking, Zynga did not
achieve a great level of success. Zynga has also fallen faster
and harder than Support.com.
In 2011, Zynga hired a few former Electronic Arts (NASDAQ:
) executives. Instead of using them to turn the company around,
Zynga continued to produce a
plethora of copycats
If Zynga had flourished, there might have been a good reason
for Pincus to take the firm private. He could have raised the
firm's value even higher and then brought it back to public
Now, that is all but a pipe dream. While investors could keep
hoping and wishing for a truly groundbreaking business decision,
the reality is that Zynga is the same exact company that it was
when it was founded in 2007. Pincus has repeatedly told investors
(remember: actions speak louder than words) that the company has
no plans to change. Now that they finally realize this, they have
no desire to invest in the stock.
The real kicker is that Pincus does not have any desire to
invest in it either. If he did, he probably would take a risk and
take the company private.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.