Zynga today announced that it would stop pursuing a real money gambling license for the US. The announcement coupled with an already negative outlook and a drop in users, caused the company shares to fall by more than 13% during after-hours trading.
Zynga had put high hopes in real money gambling and viewed this move as a way to pull out of the red. Recently it launched real money gambling games in the UK which prompted shares to rise, albeit briefly.
It seems the new CEO of Zynga (and former Xbox division head at Microsoft), Don Mattrick, is planning a full overhaul of the company and its strategies. He spoke out on a statement saying “We need to get back to basics and take a longer term view on our products and business, develop more efficient processes and tighten up execution all across the company. We have a lot of hard work in front of us and as we reset, we expect to see more volatility in our business than we would like over the next two to four quarters.” The market reacted negatively to this move.