Zynga stock surges after Facebook revenue link revealed

Zynga's stock price hasn't gotten much respect from investors since the game publisher first launched its public stock offering in December. Today is another matter. The stock price has surged up as much as 18 percent today and now Zynga's stock is the highest it has ever been in its brief life.

What happened? Facebook's IPO filing on Wednesday happened. The social networking service revealed in its papers with the US Securities and Exchange Commission that it received a whopping 12 percent of its total revenue from Zynga. Most of that revenue comes from the sale of virtual goods and services in Zynga's many games on Facebook, including Farmville, Frontierville and Cityville. Facebook gets a 30 percent cut from those sales.

Zynga gets the vast majority of its revenue from its Facebook games. However, in its IPO, Facebook did say that its revenues would take a hit if Zynga decided to move its games off on Facebook onto its own service or if the two companies' partnership otherwise was broken.

This would strongly suggest that while Zynga certainly needs Facebook, at least at the moment, Facebook may not be able to generate as much revenue without Zynga's games. By the same token, the more people Facebook signs up to use the service, the more money it stands to get if those new visitors play Zynga's games and purchase virtual items.

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4 Comments

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Only 10%?? there profit for the year was $1 billion so wouldn't that mean they received $120 million from zynga as profit?

Hardly something you'd want to cut is it

rfirth said,
Fragile ecosystem...

Not really, it's only 10% or so of the revenue, Facebook is easily big enough now to partner with big time players like EA to produce stellar games for Facebook if needs be.