When it Comes to Social Media: “Don’t Believe the Hype” – Zynga Inc (ZNGA), Groupon Inc (GRPN)

Over the last year, the share price of Zynga is down by almost 80%. But is up almost 20% for the last week as earnings improved, beating what the analyst community was expecting. But Zynga is still losing money. The share price is off by 70% from the initial public offering price. Moreover, it is still losing money. And revenues were down 15%.

Volume is up sharply in recent trading for Zynga along with its share price. It is difficult to see how that can that upward trajectory can be sustained with revenues falling and the company continuing to lose money. Without an economic moat, the share price of Zynga should start to decline again, along with those for Groupon, Angie’s List, and FriendFinder Network.

The article When it Comes to Social Media: “Don’t Believe the Hype” originally appeared on Fool.com and is written by Peter Harengel.

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