Social video game provider Zynga is now worth less than its seven-story headquarters in San Francisco. The company, which was purchased in 2012 for $228 million, was put on sale in February this year with an undisclosed value.
According to the Halting Problem blog, Zynga’s building in the Design District of San Francisco has been assessed at $540 million. The company itself is estimated by analysts to be worth about $500 million.
While the company’s current market value is around $2 billion, approximately $1.5 billion of it is cash on hand reserves and is used in operations.
Best known for its 2009 hit social game “Farmville,” the game maker once enjoyed a massive social media following with 10 million daily active users. Its partnership with social networking site Facebook helped it to maintain over 265 million monthly active users until Q1 of 2013.
Before ending its partnership with Facebook on March 31, 2013, around 80% of the company’s revenue came from Facebook users. It has been on a steady decline ever since.
On June 3, 2013, the company laid off 18% of its workforce and closed offices in New York, Los Angeles and Dallas. This was followed by another 15% reduction of employees in 2014. Zynga’s stocks, which traded at as much as $14.50 per share at its peak in 2012, has sunk to its current $2.50 this year.
Zynga has been reporting break-even results for the last three quarters and analysts have expressed doubts about the sustainability of its business model. The company, however, seems to be more positive despite setbacks with its plans to launch 10 new game titles this year.
Zynga CEO Frank Gibeau said in a conference call with financial analysts: “Over the long term, there is no reason why Zynga’s margins can’t be more in line with its peers. […] Zynga has all the ingredients needed for a successful turnaround, and it’s well underway.”