Short Sellers Winning in Social Media Value Crash (ZNGA, FB, SOCL)

Zynga, Inc. (NASDAQ: ZNGA) is not following logic right now, at least sort of.  Andrew Bary defended the stock over the weekend in Barron’s in an article titled “Beaten-Down Zynga Is Worth a Look.”  Apparently it was worth a look, followed by another round of traders and investors hitting the “Sell!” button all over again.  To add more insult to injury, Facebook, Inc. (NASDAQ: FB) shareholders are selling out of those shares too all over again.

Today we have seen that Bloomberg is talking about Zynga in a much worse light on the Money Moves features today.  Expense per user is up, revenue growth per user is being shown as down, and revenue growth keeps contracting.

To show just how bad the moves have been, Zynga is down another 2.1% to $3.01 for a low on the day versus a post-IPO low of $2.97.

Facebook’s stock is down yet again by 1.6% to $23.33 and the question is boiling down to whether or not Facebook is setting itself up to challenge last week’s post-earnings and post-IPO low of $22.28.  The analysts are not yet willing to defend it.  That being said, until something changes there is just not a compelling story that Wall Street is buying yet.

The Global X Social Media Index ETF (NASDAQ: SOCL) is also down 1.45 at $12.29 on the trading day.

JON C. OGG