Lawsuits filed over Zynga exec stock selloff - price will bounce back permalink
When I put the Zynga and Facebook stock scandals side-by-side and compared them, I realized they couldn’t be more different. Zynga is accused of manipulating its underwriters to allow top-level executives, who supposedly saw a potentially poor earnings statement in the works, to SELL off large amounts of stock while all other employees had their shares frozen. Facebook on the other hand, manipulated their underwriters into BUYING more stock in an effort to keep the price above the initial offering price and attempt to create an artificial “pop” for their early investors.
While both companies’ stocks are currently in a free-fall, I see them going in two opposite directions. Facebook is struggling to figure out how to monetize, and as I wrote yesterday, may be earning what little they can through click-fraud. While you have to question the ethics of the Zynga management, they are making the right business decisions despite a poor quarterly statement recently. Specifically, they’re making a heavy investment in unbinding themselves from the Facebook platform. Once they do, I think that’s going to really send these companies in opposite directions. Zynga will bounce back.