The most damning thing in all of this is that while the obvious salvation for Zynga is to be a roadkill acquisition by Facebook (where immediately much of their overhead is removed through reduced transaction costs), the market is placing a negative expected value on it.
Aside from no faith in management, what else could be the reason for the discount? Their business model is so bad that reducing the transaction costs can't fix it? They have hidden liabilities related to their copycat culture that haven't surfaced yet? Shareholder litigation? Or just simply a massive burn rate?
>"Aside from no faith in management, what else could be the reason for the discount?"
At this point Zynga could be liquidated and still produce value. But the lower-than-book valuation implies the fear that Zynga will eat into its assets (re: cash) before that has a chance of happening, thus lowering its value.
From the parent level comment: The book value doesn't take into account an expected write off of $90m, which would drop the price per share to lower than the share price
Wall street assigns a lot of value to management. And with reason - it is the management that has turned over companies such as IBM and GE over the years. The departure of basically the whole upper management of the company is the most ominous sign in this story.
Aside from no faith in management, what else could be the reason for the discount? Their business model is so bad that reducing the transaction costs can't fix it? They have hidden liabilities related to their copycat culture that haven't surfaced yet? Shareholder litigation? Or just simply a massive burn rate?