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Here's What You Should Know About Zynga Now

Alex Dumortier, CFA
July 2, 2013

U.S. stocks traded in a narrow range today, ending the day essentially unchanged as the S&P 500 (INDEX: ^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (INDEX: ^DJI) fell 0.05% and 0.28%, respectively.

Consistent with that small loss, the CBOE Volatility Index (VIX) (INDEX: ^VIX), Wall Street's "fear index," rose just 0.4% to close at 16.44. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

Zynga: Don't play this game
The shares of social games developer Zynga (NASDAQ: ZNGA) are up by nearly a fifth in two days (see graph) on news that founder Mark Pincus is stepping down as CEO to make way for Don Mattrick, who had been the president of Microsoft's Interactive Entertainment Division. Is that "pop" justified?

ZNGA Chart

ZNGA data by YCharts.

The more I learn about Mattrick, the more I think this hire is a terrific coup for Zynga. For one thing, one would be hard-pressed to find someone with deeper knowledge and experience of the gaming industry. At 17, Mattrick founded games company Distinctive Software, which he sold to Electronic Arts (EA) by the time he was 27. That's where he went on to spend 15 years of his career. At EA, he built two fabulous franchises, the Sims and FIFA Soccer. His record developing the Xbox franchise du