Shortly after it first went public, Zynga hit a market cap of $9 billion. Since then, the company which had such one time hits as Farmville and Words with Friends has seen its valuation crater, with its public stock now valued at roughly $2 billion. However, excluding the company's $1.5 billion in cash implies that its underlying operations are valued at about half a billion dollars. Which is ironic because that is less than the value of the San Francisco-company's based headquarters.
According to SFGate, "Zynga now faces the same kind of problem that many SF homeowners face: its house is worth more than the company." Perhaps that is why the company announced in February that it was putting its 668,000-square-foot, seven-story headquarters on 8th and Townsend for sale as it dealt with declining market share and layoffs.
The blog Halting Problem cited multiple sources saying that the building, which Zynga bought in 2012 for $228 million, is now worth around $540 million. In other words, "as a real estate flipper, Zynga is doing gang-busters. As a publicly held company, not so much." Perhaps instead of Facebook video games, Zynga should have been a REIT? Meanwhile, Zynga is going from owner to renter with a building that's worth more than it is. "How San Francisco."
Why is this happening? Since it's early successes, Zynga has had a hard time adapting from a Facebook desktop world to a mobile-apps world, and its newer games have generally flopped. As a result, the company has pared down its workforce from over 3,000 employees to anywhere from 1,700 to 2,300, depending on the source.
Halting Problem offered this stinging critique from one analyst: "I'm not sure what's more ridiculous now: the outrageous prices of the SF housing market or the idea that anyone still enjoys playing Farmville."
Perhaps Zynga's next game will be Sale-Leasebackville? Unfortunately, if the game is modeled after the creator's own disastrous attempts at pivoting its business model into something that will generate cash, the outcome is assured: bankruptcy, followed by full liquidation.
And speaking of doomed companies occupying overpriced digs, we wonder what is the valuation of Yahoo's Sunnyvale campus? Surely there are a few dozen Chinese money launderers who would be delighted to park their hard-stolen cash in the only thing left of value in Marissa Meyer's crumbling business empire.