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Zynga Shares Plunge on Revenues Miss: Tech Winners & Losers

Tickers in this article: ANET CSCO NVDA TSLA UBNT ZNGA

NEW YORK ( TheStreet) –– Zynga shares dropped 5.8% to $2.75 this morning following disappointing second-quarter earnings.

The online games maker’s revenues declined to $153.2 million from $230.7 million a year earlier, a 33.6% change, while earnings per share were flat. Analysts polled by Thomson Reuters expected break-even earnings on revenues of $191 million. Monthly active users (MAUs) were 130 million, down from 187 million in the same quarter last year but up 5.7% sequentially. Monthly unique players (MUPs) were 1.7 million, a drop from 1.9 million a year ago but a 21.4% increase sequentially.

Zynga also lowered its 2014 revenue guidance. It now expects between $695 million and $725 million in revenue, down from the previously estimated range of $770 million to $810 million. Next quarter, the company expects revenues between $160 million and $170 million and earnings from flat to 1 cent per share.

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"While our quarterly financial results were in line with our guidance range, we aspire to do better and improve execution across our business,” said CEO Don Mattrick in a press release. “Inside Zynga, we recognize that our products have the potential to live for multiple years and with nurturing, refinement and investment, they can grow and scale. We are purposefully competing, and while we would like to be further along, we believe we are making the right decisions to grow our business and unlock long term shareholder value.”

Zynga ended the quarter with $1.149 billion in cash and equivalents, down from $1.541 billion at the end of 2013.

Analysts were bearish following the report. Barclays analyst Christopher Merwin who holds an “equal weight” rating on the stock and a $3 price target, was concerned about “the likely volatility in Zynga's near-term performance as the company ramps investment into the new franchises,” which, however, may represent potential growth opportunities.

Credit Suisse analyst Stephen Ju rates the stock an “underperform” with a $3.50 price target, but similarly noted that given the company’s new games released every year, “the possibility of upward revisions to estimates is increasing given the more ‘at bats’ the company will have.” 

NVIDIA shares jumped 8.3% to $18.90 after releasing strong quarterly earnings.

For its second quarter 2015, which ended June 27, 2014, NVIDIA earned 30 cents per share on revenues of $1.102 billion, a 13% revenue increase year-over-year. Analysts surveyed by Thomson Reuters forecast earnings of 20 cents per share on revenues of $1.100 billion. For the third quarter, the chip maker expects revenues of $1.20 billion, plus or minus 2%.

"We had a great quarter with strong gains in each of our three growth areas -- Gaming, Datacenter & Cloud, and Mobile," said CEO Jen-Hsun Huang in a statement. "Our Tesla  datacenter business is in high gear, benefiting from strong demand from cloud service providers, and our new SHIELD tablet is generating considerable excitement. NVIDIA's accelerating growth stems directly from investments in extending our visual computing leadership to the mobile-cloud revolution."