The lights are on
It's been a bad week for Zynga. It's stock took a dive earlier in the week, falling over 41 percent to a low of $2.99 (at the time of this writing, it is trading for $3.17 a share). But what's really notable is the fact that many large investors in the company -- including founder Marc Pincus -- had recently cashed out huge amounts of Zynga stock, to the tune of $516 million.
In April, which as Yahoo Finance notes is in the same financial quarter that the company's poor earnings prompted its stock to fall, Zynga held a "secondary stock offering." This offering consisted solely of stock owned by Zynga executives and well-heeled investment houses. All told, they sold off 43 million shares at $12 a share -- shares which are now trading for a little over $3.
Marc Pincus himself sold 16.5 million shares for over $200 million. Zynga CFO David Wehner sold 386,000 for $4.6 million, and former EA and Microsoft exec and current Zynga COO John Schappert sold 322,000 shares for $3.9 million.
While there is no evidence of wrongdoing as yet, it certainly looks suspicious when so many company insiders dump stock in the same quarter that the company's financials go south.
Email the author Matt Helgeson, or follow on Twitter, and Game Informer.
Hmm... do I smell an investigation?
I am not surprised, knowing what we know of Zynga business practices. Hopefully, if they are indeed guilty, they get the book unlike so many other Wall Street execs.
oooooo looks like some people are going to go to jail! insider trading is illegal, almost as illegal as there crap games BOOOM!!!
This does look sketchy, but it's possible that things just worked out really well for them, like when the MySpace founder sold MySpace for $250 million but Facebook ended up rendering it obsolete just a couple of years later, but somehow I don't think that's the case.
this is really shady
Oh Zynga, how you never fail to seem more evil than ever.
Martha Stewart Says: "Dumping your stocks in anticipation is called insider trading and that's a bad thing"
After all she should know.