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Zynga Stock Down 8 Percent After Company Announces Job Cuts

Zynga stock fell 8 percent in late afternoon trading after the company announced that it was cutting 520 jobs. This equates to nearly 20 percent of its workforce. The company also announced that its projecting a second quarter loss of between $39 million and $28.5 million.

The San Francisco based company rose to fame after its online game, Farmville, rose to popularity on the Facebook (NASDAQ: FB) platform. After Farmville, subsequent releases were widely popular prompting the game maker to IPO in December of 2011 at $11 per share.

Since the IPO, Zynga stock has fallen. To date, the stock is down nearly 73 percent to $2.99 per share.

Technical Analysis

Technically, the stock is showing very few signals. Today’s 12 percent drop places the stock well below its 20 and 50 day moving averages and breaks the weak uptrend. Looking out over the past eight months, the stock saw gains of 90 percent off of its lows but has since retreat in what looks like a mean reversion sell off.

Prior to Monday’s move, the stock was in a weak basing pattern as it drifted around its 50 day moving average. If there’s anything positive to take from today, the stock sold off to it’s 200 day moving average and bounced back 3 percent meaning that key level held.

Zynga stock will have to hold that level or risk a technical sell off of a severe magnitude.

Disclosure: At the time of this writing, Tim Parker had no position in Zynga or Facebook.

[stock-tools exchange="NASDAQ" symbol="ZNGA" image_height="180" image_width="300"]

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