Published in News
Zynga sued by shareholders
Farmville maker could buy the farm
Zynga has been sued by shareholders accusing the "FarmVille" creator of failing to warn about declines in user and revenue growth.
Last week the company announced that it had disastrous results and its shares fell dramatically. Two California law firms filed lawsuits seeking class-action status on behalf of stockholders this week, taking the company to task for allegedly concealing threats to its business and sales growth. They failed to mention that Facebook had changed its platform to make it easier for users to find rival games. Zynga stunned Wall Street by reporting quarterly results well below expectations and slashing its 2012 revenue forecast. Its stock fell by 42 percent to a record low and analysts cut their recommendations on the stock.
Law firm Kessler Topaz Meltzer & Check claim that Zynga misrepresented or failed to disclose material adverse facts about its business, operations, and growth prospects.
The lawsuit accused Zynga of concealing declines in users and the sale of virtual goods such as a cow in "FarmVille" which is its prime revenue source. A second lawsuit filed Tuesday by Robbins, Geller, Rudman and Dowd repeated many of the claims.
Zynga shares are now worth less than $2.95 which is a far cry from their December $10 début price and can probably buy you less cows.