Facebook Shares Slip After Disappointing Zynga Earnings Report

Zynga's share price plummeted almost 40% in after-hours trading Wednesday after the company reported a $22.8 million loss for the second quarter. The social gaming developer also revealed that it was lowering its outlook for the rest of the year, due in part to "a more challenging environment on the Facebook web platform."

Zynga is hugely dependent on Facebook; it reported earlier this year that 92% of its revenue was generated through the social media giant.

Shares in Facebook, which is announcing its earnings on Thursday, fell 8% following Zynga's report.

In the earnings report, company CEO and founder Mark Pincus touted Zynga's growing advertising business - its revenue was up 170% year-over-year - but said the company "faced new short-term challenges which led to a sequential decline in bookings." Average daily bookings are down 10% year-over-year.

Zynga raised $1 billion in its IPO last December, but has seen its stock price drop by half since then. Today it reported that it had 72 million daily users, up 23% from the second quarter of 2011.

But the numbers tell a different story if you compare today's announcement to December 2011. In the last six month, Zynga's flagship 'Ville games - CityVille, CastleVille, FarmVille - have lost millions of daily players.

Photo by auchenberg.