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.
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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