Why Zynga Inc Stock Plunged Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What:Shares of Zynga plunged nearly 15% as of 12:20 p.m. Thursday after the free-to-play games specialist surprised investors by announcing Don Mattrick has stepped down as CEO and from the board of directors effective yesterday. Replacing Mattrick is Zynga's much-maligned founder and former CEO, Mark Pincus.

So what: The move is especially curious considering Mattrick was paid handsomely for defecting to Zynga in 2013 from his former role as president of Microsoft's interactive entertainment division, including a $5 million signing bonus and stock options valued at upwards of $40 million to vest over a three to five year period.To be fair, Zynga also noted Pincus -- who still personally owns around 10% of Zynga's outstanding stock and has roughly 60% of its voting rights -- has requested an annual salary of just $1 for his role.

Now what: Mattrick, for his part, stated he plans to "return to Canada to pursue [his] next challenge," and insisted he is "excited about the company's trajectory" going forward.

Even so, when Zynga announced weaker-than-expected fourth-quarter results in February, I made it clear I'm skeptical of the difficult economics driving companies in the free-to-play games market. Until Zynga can prove otherwise and show investors it can achieve sustained profitability over the long term, I still think the stock will continue to underperform.

The article Why Zynga Inc Stock Plunged Today originally appeared on Fool.com.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.