Shares in Facebook fell on European markets today after dismal figures from online gaming site Zynga triggered fresh fears about the growth potential of Mark Zuckerberg’s company.
Facebook, whose chief operating officer is Sheryl Sandberg, reports profit figures tonight — its first since floating on the stock market in the US, and analysts are increasingly worried it is being eclipsed by other social networks.
The company relies on the maker of the FarmVille game for about 15% of its revenue. The vast majority of Zynga’s customers play its games via Facebook, so the two companies’ popularity is inextricably linked.
The number of people playing FarmVille plunged to just 20 million users this month, compared with 80 million as recently as March.
Shares in Facebook which are traded in Germany fell €1.28 to €22.50 today amid concerns about tonight’s results.
Following the debacle of its flotation, in which Nasdaq glitches left many investors unable to trade the stock, the company is under huge pressure not to disappoint the markets.
“If they miss [profit targets], it would be catastrophic for the stock,” said Michael Binger, a fund manager at Gradient Investments. “This is a very important earnings quarter for them. It will establish in people’s minds how they think of the company.”
Facebook shares are currently trading at only three quarters of their flotation price of $38 a share amid serious concerns about its efforts to grow in mobile advertising.
Some optimists hope it will come up with new, money-spinning ideas to keep investors happy, but serious doubts remain about whether it will get its valuation back up to the float price any time soon.
More than half of Wall Street’s famously upbeat analysts covering Facebook now have them on ratings of “hold,” “underperform” or “sell”.
