Online gaming company Zynga has suffered a disastrous drop in share value after its $10-a-share flotation has plummeted to a paltry $3.18 - a loss of nearly 70%.




The embarrassment echoes the similar experience felt by Zynga's symbiotic social networking host, Facebook, The Drum and Digital Spy are reporting.

 The San Francisco company reported a loss for its second quarter, its year-over-year revenue growth dropped to 19% from 32% in the prior quarter, and Zynga lowered its full-year outlook.

“Right now, everything is going wrong for Zynga. In a rapidly changing Internet landscape that is moving to mobile, it’s very hard to have confidence these issues are temporary.”

The games firm is a major element of Facebook and the plunge raised doubts about Facebook's own figures later today - the first as a public company. Facebook shares were down 8% to $26.99. Zynga's revenue for the quarter was $332 million (below the $343m previously predicted by analysts) while the company also lost $22.8m. Its market capitalisation shrank to under $4 billion: it was $10 billion last December.

“Facebook made a number of changes in the quarter,” John Schappert, chief operating officer, said in a conference call with analysts. “These changes favoured new games. Our users did not remain as engaged and did not come back as often.”
 
With Zynga playing such an integral part of Facebook's gaming success, this failure on Wall Street is a dent in Facebook's plans to take online gaming to the next level and become a billion-dollar industry. Facebook has already announced a switch from their "Credits" currency format to legitimate monetary system including sterling, dollars and yen, with Zynga's creations the backbone of this new industry of social gaming. With Facebook, Zynga and other companies struggling with lukewarm IPO flotations, perhaps the social bubble has already burst.