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What: Shares of online social games operator Zynga
So what: Today's bleak quarterly forecast -- management expects a third-quarter loss due to a decline in paying users, as well as costs related to its purchase of OMGPop -- coupled with yet another full-year cut, naturally reinforces concerns over the sustainability of Zynga's business model. Facebook
Now what: Management now sees 2012 EBITDA of $147 million-$162 million, down significantly from its prior view of $180 million-$250 million. "We're addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities," Founder and CEO Mark Pincus reassured investors. "We remain optimistic about the opportunity for social gaming and the power of our player network of 311 million monthly active users." Given Zynga's clearly faddish and speculative nature, however, I'd remain highly cautious about buying into that bullishness.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook. Try any of our Foolish newsletter services free for 30 days.