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Facebook Could Buy Zynga

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Facebook Could Buy Zynga

Justin W. Davis

With Zynga's stock price falling -- in parallel with its older games falling down Facebook's list -- the company may be prime for a takeover.

Could Facebook be ready to buy up Zynga? At least one report is suggesting that the social network has quit featuring Zynga's games to get its stock price to drop and make it easier to take over.

Facebook recently changed the way it's featuring games, showing the newer ones first and the older ones down the list, and that's been the death knell for Zynga, according to Seeking Alpha. So far this year the company had a 70 percent drop in share price, down to $3.09 a share, according to Reuters.

Seeking Alpha also suggested that perhaps Facebook changed its policy of highlighting games to "torpedo" its partner to get the price to drop and make it easier for a takeover. About $1 billion would cover it, and Facebook would get controlling interest -- and possibly its hands on the $1.6 billion in cash Zynga reportedly has.
 
We don't think this was done deliberately by Facebook. If anything it was because Zynga and Facebook no longer have its initial special relationship anymore. Zynga decided to expand and Facebook began to look elsewhere for social games -- even appearing on Google+ -- which did not endear itself to Facebook execs.
 
If anything, Zynga had much more to lose than Facebook in their partnership and Zynga decided to venture out to other social networks to boost its initial public offering last December. There's nothing wrong with that, but you generally don't get most-favored status from a social network when you aren't exclusive.
 
That said, Facebook buying Zynga could be interesting, but we have a feeling the social network should wait for the price to come down just a little more.
 
 
 
 

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