Shares in social gaming company Zynga have dropped 11% to below $US5 per share after an analyst report claimed the company may be in trouble.
The Cowen & Co report says it believes the market for Facebook gaming has hit a “negative inflation point” and that more consumers are using smartphone apps.
Zynga’s entire success is pinned on Facebook gaming, and it even said during its IPO that the company is dependent on the social network for the majority of its success.
The Nasdaq warned yesterday that Zynga shares had reached a point where it would now prohibit short sales, with the regulation to remain in effect until Wednesday.
The company went public last year, debuting at $US10.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
