• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

In Play: Virtual Farm-Backstopped Default Delay Securities Launched After Zynga Implodes

Tyler Durden's picture


UPDATE: ZNGA is down 40% now, trading with a $2 handle

They said it could never happen. They said it was social, mobile, everything... Well, oops... It seems the drought conditions around the world have hit the virtual farms too. Let it 'Virtual Rain'

  • *ZYNGA 2Q REV. $322.5M, EST. $343.1M                 
  • *ZYNGA 2Q ADJ. EPS 1C, EST. 6C                        
  • *ZNGA SEES YR EPS ADJ 4C-9C, SAW 23C-29C, EST. 27C   

and with that 33% 40% of market cap is wiped away... and the derivative play - Facebook is down 7% after-hours and EURUSD is dipping as all that virtual cash is vaporized (yes seriously EURUSD is dropping!). We assume that very soon, congressmen around the country will be calling for a government intervention as the hand-of-god impacts these poor virtual farmers. FYI - Margin Stanley is the largest ZNGA holder at 13.84%.


and since the IPO...

Finally, as a reminder, ZNGA priced its follow on on March 28 at $12.00,
three months after IPOing. Morgan Stanley made money on both events.
Will MS now also be the advisor on the firm's eventual Chapter filing?
Too bad there are no assets to liquidate, unless of course DIP lenders
accept virtual stuff for LTV calculations. 

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Wed, 07/25/2012 - 16:43 | 2650710 hedgeless_horseman
hedgeless_horseman's picture



I felt a great disturbance in the Farce, as if thousands of Menlo Park citizens cried out in terror and were suddenly silenced. I fear something terrible has happened.

FB crushed in after hours. -2.22%

Wed, 07/25/2012 - 16:44 | 2650734 HoofHearted
HoofHearted's picture

"I only want to see you standing in the virtual rain. Virtual rain, virtual rain...."

Back when he was known as Prince before he was Symbolman before he was Prince again...

Wed, 07/25/2012 - 16:53 | 2650774 TruthInSunshine
TruthInSunshine's picture

Virtual rain, such a timeless classic...


Hey, are the virtual regulators going to force the actual TBTF banks to take any virtual haircuts the next time they receive actual bailouts again?

Wed, 07/25/2012 - 16:57 | 2650791 Precious
Precious's picture

Twitter will save them.

Wed, 07/25/2012 - 17:27 | 2650925 fonestar
fonestar's picture

Gimmick 2.0

Wed, 07/25/2012 - 18:01 | 2651069 billsykes
billsykes's picture

Aw look, groupon and Zynga are tracking down together, isnt that cute, shit does sink to the bottom.

Wed, 07/25/2012 - 18:18 | 2651123 AldousHuxley
AldousHuxley's picture

Zynga's founder (ex-bankster) asks for bailout of his virtual farm foreclosures.

Wed, 07/25/2012 - 19:12 | 2651259 Tippoo Sultan
Tippoo Sultan's picture

The flames from this particular roach motel inferno are licking at the heels of the usual institutional arthropods: Capital Research, Federated, Morgan Stanley, and that perennial mo-mo whipping boy, Fidelity.

Wed, 07/25/2012 - 21:06 | 2651590 malikai
malikai's picture

Yep. Those floaters just need a little time for the gas to come out.

Wed, 07/25/2012 - 19:12 | 2650987 John Law Lives
John Law Lives's picture

Since you mentioned Prince, I couldn't resist posting this.  This song is a cover of 'Raspberry Beret' as sung by Warren Zevon + 3 former members of REM.  This is awesome (much better than Prince's version - imho)...

Crank it up!


Wed, 07/25/2012 - 19:24 | 2651304 Tippoo Sultan
Tippoo Sultan's picture

"Dirty Mind" was Prince's last worthwhile LP...


Once he embarked upon his sanitized movie/soundtrack odyssey, it was frankly all downhill from there.

Wed, 07/25/2012 - 16:47 | 2650755 Frederic Bastiat
Frederic Bastiat's picture

hahahah, hedgeless that was one of the best comments I've ever seen on here. 

Wed, 07/25/2012 - 16:57 | 2650792 williambanzai7
williambanzai7's picture


Wed, 07/25/2012 - 17:07 | 2650842 ebworthen
ebworthen's picture

"Ruh roh Raggy!"

Wed, 07/25/2012 - 17:27 | 2650927 The Limerick King
The Limerick King's picture



Zynga is facing a drought

Their future is surely in doubt

Their online manure

Has lost its allure

And Farcebook is facing a rout 

Wed, 07/25/2012 - 18:20 | 2651127 AldousHuxley
AldousHuxley's picture

don't invest in any startup featuring dogs headed by ex-bankster


Wed, 07/25/2012 - 18:55 | 2651225 TruthInSunshine
TruthInSunshine's picture

Limerick King is in the house.

Time to break out the finest champagne (ala LIBORlicious) and get this party started.

Wed, 07/25/2012 - 20:40 | 2651524 The Limerick King
The Limerick King's picture

Thanks Truth...I know I haven't been posting much the last few months, but my heart is always at the Hedge!

Wed, 07/25/2012 - 17:57 | 2651051 billsykes
billsykes's picture

After all Zynga only lost 478m net against 90m profit in the last 4 years. But still valued at 3.74 Billion?

I smell a big bonus for all the insiders via a big steaming pile of debentures very soon.




Thu, 07/26/2012 - 01:04 | 2652117 SoCalBusted
Wed, 07/25/2012 - 17:03 | 2650825 DormRoom
DormRoom's picture

Groupon is next.. web 2.Oh my god, what a pump n dump.

Wed, 07/25/2012 - 18:34 | 2651168 AldousHuxley
AldousHuxley's picture

greedy never learn

Wed, 07/25/2012 - 21:16 | 2651620 Muppet of the U...
Muppet of the Universe's picture


Disclosure:  Short Znga 500,000,000 shares.

Wed, 07/25/2012 - 17:14 | 2650859 ebworthen
ebworthen's picture

Hedgeless Horseman said:  "as if thousands of Menlo Park citizens cried out in terror and were suddenly silenced."


Watching Chipotle and Green Mountain Coffee crash were almost as enjoyable.

When the hoity-toits can't afford Whole Foods anymore that one will be really fun to watch get monkey-hammered.

Wed, 07/25/2012 - 23:52 | 2652013 natty light
natty light's picture

Will Pandora's Box be opening soon?

Wed, 07/25/2012 - 17:22 | 2650901 Winston Churchill
Winston Churchill's picture

Or even:

I felt a great disturbance in the Bourse today.

Wed, 07/25/2012 - 20:09 | 2651434 ZeroAvatar
ZeroAvatar's picture

Obi-Wan Hollande, you are our only hope.  Obi-Wan Hollande, ................

Wed, 07/25/2012 - 17:31 | 2650939 LeisureSmith
LeisureSmith's picture

Well, Facebook is down 8 pct. and i am drunk. Happy times.

Wed, 07/25/2012 - 17:51 | 2651028 Wakanda
Wakanda's picture

Trust the Farce Luke.

Wed, 07/25/2012 - 20:10 | 2651439 ZeroAvatar
ZeroAvatar's picture

(Voice of Darth Vader)  "Let him go, STAY on the Leader".

Thu, 07/26/2012 - 04:37 | 2652269 StychoKiller
StychoKiller's picture

The Dept of Cyber-agriculture is pressing Congress for cyber-subsidies for virtual-farmers...

Wed, 07/25/2012 - 16:54 | 2650725 Ineverslice
Ineverslice's picture


And, may the Farce not be with you (HT HedgelessHorseman).

Wed, 07/25/2012 - 16:42 | 2650726 Lost Wages
Lost Wages's picture

When is FB earnings report? :)

Wed, 07/25/2012 - 17:10 | 2650853 Tim Knight from...
Tim Knight from Slope of Hope's picture

Tomorrow (Thursday) after the close. LULZ guaranteed.

Wed, 07/25/2012 - 17:57 | 2651054 hack3434
hack3434's picture

+ 268mm shares will be unlcoekd (3months after IPO) and then another 1.7b by the end of the year. 

Wed, 07/25/2012 - 16:42 | 2650728 ghostfaceinvestah
ghostfaceinvestah's picture

You mean selling stuff to kids with no jobs and boatloads of student debt and whose parents are underwater on their mortgage and have no jobs isn't a sustainable business?

Wed, 07/25/2012 - 17:37 | 2650964 RockyRacoon
RockyRacoon's picture

They could always slaughter some of that virtual livestock and have a virtual feast. 

The actual weight loss might bring them back to reality.

Wed, 07/25/2012 - 19:08 | 2651253 John_Coltrane
John_Coltrane's picture

Yep, thought their business "model" was a little weak when I bought my Znga 5 puts a few weeks back.  Even I didn't imagine this kind of blood bath so soon though.  I rolled by GRPN puts from 20 to 13 and recently to Jan 8s.  Based upon my ANR, FLSR, FB, and LVS (also getting killed afterhours) puts , I think its a lot easier to ID the companies with bad business models than good ones. 

Wed, 07/25/2012 - 16:43 | 2650731 Darkness
Darkness's picture




Wed, 07/25/2012 - 16:43 | 2650732 Darkness
Darkness's picture


Wed, 07/25/2012 - 16:44 | 2650733 Let them eat iPads
Let them eat iPads's picture

Down 40%

Wed, 07/25/2012 - 17:31 | 2650936 Unbezahlbar
Unbezahlbar's picture

Who bought at 15? Who owns now (according to Yahoo)



Wed, 07/25/2012 - 17:39 | 2650978 veyron
veyron's picture

DST couldnt give a shit about the price: their basis is so low that a sub-penny price could come close to rendering the investment breakeven ...

Wed, 07/25/2012 - 16:44 | 2650735 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

This will usher in the deflation you have all been waiting for.  Any minute now....deflation....here it comes....

...any minute now....

Wed, 07/25/2012 - 17:33 | 2650952 chet
chet's picture

Yes, I suspect the price of shitty social networked video games is about fall significantly.

Wed, 07/25/2012 - 16:44 | 2650736 Robot Traders Mom
Robot Traders Mom's picture

It seems the drought conditions around the world have hit the virtual farms too.


I don't throw 15 year-old girl acronyms around lightly, but ROFL!!!

Wed, 07/25/2012 - 17:01 | 2650812 TruthInSunshine
TruthInSunshine's picture

You can thank your son for the more and more frequent puking-up-blood episodes.


Just sayin'

Wed, 07/25/2012 - 16:44 | 2650737 ihedgemyhedges
ihedgemyhedges's picture

Zynga, it was nice knowin' ya..........

Wed, 07/25/2012 - 17:03 | 2650821 Strider52
Strider52's picture

Ya know, last night I played Zynga No Limit Texas Hold 'em for the 1st time in 4 months. Coincidence? I think not...

Wed, 07/25/2012 - 17:05 | 2650834 IndicaTive
IndicaTive's picture

Looks like Farmville needs to implement a virtual PIK program. Pronto.

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