Will Zynga, Inc. (ZNGA) Be Extinct Without Facebook Inc. (FB)?

Zynga, Inc. (NASDAQ:ZNGA) made its name by creating several online games specifically for the platform created by Facebook, Inc. (NASDAQ:FB). But now, Zynga has been suffereing big-time both in its stock and in its business model, simply because Facebook changed its layout to the current “Timeline,” which has been hailed and criticized by users – sometimes in the same breath.


It seems that ever since Facebook Inc. (NASDAQ:FB) changed its format to the “Timeline,” the online games that were a staple on Facebook – many created by Zynga, Inc. (NASDAQ:ZNGA) – have been bumped aside, so much so that many users of the games could no longer find them or if they did, found it such a hassle that it wasn’t worth playing anymore. And as the players stopped playing, Zynga took a huge hit. In the past year, shares of Zynga sold for nearly $16 a share; now it’s trading at just below $3.

To be fair, Zynga, Inc. (NASDAQ:ZNGA) has been working hard to diversify itself by offering mobile games to make an impression in the rapidly growing mobile market, and has been making some headway without the help of Facebook, which in its itself is mobile, but s struggling with finding the best way to monetize its presence,on mobile phones, which has been growing incrementally.

However, with Zynga gettings its foothold in online gaming with an Internet-sized hand from Facebook, can Zynga, Inc. (NASDAQ:ZNGA) make a comeback and thrive in mobile without the help of Facebook Inc. (NASDAQ:FB)? This will be an interesting question, as Zynga makes some money by selling its games on mobile phones, but Facebook likely would have to sell ads within the same mobile-phone space. Can those two entities co-exist on a very small mobile phone screen?

After being so intricately linked, a new era for Zynga, Inc. (NASDAQ:ZNGA) might be here. For the company to survive, it might have to beat its old ally, Facebook, Inc. (NASDAQ:FB) for mobile phone display supremacy – or risk extinction as a gaming provider. The move to mobile will be vital for hedge fund investors like Seymour Kaufman and Michael Stark, who had nearly 3 percent of their $1-billion-dollar portfolio (about $28 million) invested in Zynga, Inc., stock at the end of March (see their billion-dollar portfolio  here).