But on the heels of runaway hits like Temple Run 2 and Subway Surfers, the company is off to the races, hoping to give those single-player phenomena a multiplayer-focused run for their money.

(Pardon the barrage of running puns.)

The company’s latest game is Running With Friends, a smart twist on the popular endless-runner genre. As with other games, you swipe on the touchscreen to avoid obstacles, collect powerups and move your character around the screen: Left and right to change into one of three “lanes,” up to jump and down to slide.

The twist comes in the form of some familiar multiplayer features that Zynga has built around this tried-and-true formula. This is asynchronous multiplayer, meaning you can challenge someone to a race without needing to play at the same time as your opponent to compete (as is the case in other “With Friends” titles).

Developed in partnership with Twisted Metal and God of War creators Eat Sleep Play, the game just looks good — the bright Subway Surfers-esque 3-D graphics are streets ahead of the other titles in Zynga’s existing lineup.

Factoring in a bit of luck from a pregame slot-machine spin, Running With Friends awards points to players based on how far they can run and how many bonus items they pick up along the way. And if one of your opponents has run the same obstacles as you already, the game remembers how they moved, sort of like the “ghost” mode in Mario Kart.

That means you might see your friends on the track and can shove them out of the way with a swipe — which, let’s be honest, is pretty fun.

The game is iOS-only to start (so, available on iPhone, iPad and iPod touch), but Zynga’s mobile SVP Travis Boatman told AllThingsD that the company will likely do what it has done with previous games like Zynga Poker and Words With Friends: See how the game does, improve it and then roll it out to other platforms, one at a time.

On Tuesday, they were No. 3, by Thursday they were No. 400. It was mind-blowing how fast some of these supposed “hit apps” fell quickly to obscurity. Given what happened — and Apple’s response — the question remains, why did app developers use these tricks?

The main reason is that it is hard to get discovered in the App Store. Without some advantage, users might never find your app — and the amount that you can spend to get there above board is limited. Another reason is that when you hit the Top 25, then the Top 10 and then the Top 5, the exposure in the App Store generates significant organic downloads. In other words, people see you on the charts and they decide to download your app. In some ways, it’s not unlike how record labels manipulated the SoundScan charts in the 1990s to make seemingly unpopular records become hits.

But it’s hard to keep the schemers down. When Apple smartly moved against the bots last year, there was a brief gap in the market. Into that gap stepped a new breed of companies to help market apps. Sure, the scamsters always had their tricks. Notice an app pop up at No. 1? Look for hundreds of reviews that only have one word (amazing, incredible, awesome), or look for a shockingly low number of reviews for an app that’s No. 1. These are indicators that folks are doing something shady to make it to No. 1. And Apple, to its credit, tirelessly shuts them down and closes loopholes. It’s a thankless task.

But there are known, above-board companies whose mission it is to help also market apps. AppGratis, until getting booted for violations of the App Store rules, was one of those companies (Free App of the Day is another). In some ways, Apple’s halt to AppGratis is a big deal. Many of the games and apps that are at the top of the charts recently engaged AppGratis, which uses its large audience to drive large download volume. They do this by offering their members discounts on paid apps. This is particularly important to small or independent developers who lack the cross-promotion networks and marketing clout of established companies, and who can rely on a deal with AppGratis to expose them to a large audience.

While it is a big deal — to both developers and consumers — for Apple to remove AppGratis, in many ways, in the long-term view, it does not matter. And that is the key point.

There is no doubt that Apple’s vigilance makes the app store a friendly, clean and amazing place for consumers. But the fight to keep it that way is tireless and never-ending. As long as there is money to be made, app developers and app marketers will find new angles to lay siege to the charts.

But the win for Apple, and ultimately the loss for the app developers, is that in the end, the App Store really is a democracy, and no amount of cheating ever truly wins. What I mean by that is that there is a hidden meritocracy in the App Store charts. By hook or by crook, you might find a new angle to drive your app to the top, but at the end of the day, if consumers don’t like it, your app is going to fall.

What matters more than hitting the Top 10 is the ability to stay in theTop 10. That is the secret. There is tremendous movement in and out of the chart rankings, but the apps that stay there day after day and month after month — games like Candy Crush or Words With Friends, or apps like Instagram — they are the true winners. And staying there just cannot be gamed. The other apps are like shooting stars. They hit the charts via AppGratis, but there is ultimately something not sticky or fun or compelling about them, and they quickly slide back down.

So AppGratis may be gone, but companies like it will continue to crop up to take the app developer’s money. A hit is always going to be a hit, and that can only be achieved by creating an amazing product that people truly love.

Dan Porter is the former CEO of OMGPOP.

As most know, the San Francisco gaming company has struggled to find the right balance as consumer behavior has shifted from playing social games on Facebook to playing games on their phones.

In the third quarter, 60 million people played Zynga’s games on a daily basis, up 11 percent from the year-ago period. But those gains were only possible due to mobile offsetting declines on Facebook. The worry of Wall Street investors over the situation is apparent in the price of its stock, now at $2.66, which remains 72 percent below its initial public offering price at the end of 2011.

But Zynga management believes it knows how to turn things around, including expanding beyond its classic Ville-style titles, like FarmVille, to more genres that appeal to a wider audience, including casino and more hardcore titles.

In a story earlier today, I wrote about the three executives that CEO Mark Pincus has appointed to help turn things around. One of them is Steve Chiang, the company’s new president of games.

Here are some highlights from an interview I recently did with Chiang:

Tell me a little bit about your background.

Chiang: I got into computers early, when I was six or seven, and I was really into videogames and playing games on my computer. And then I got into programming. First, I got into the industry when I graduated from school as a programmer, by creating games for Super Nintendo. That’s when making a game included one programmer and two artists, or two programmers and five artists, so they were really small teams, so you really had to know all aspects of game development.

And then, in 1994, myself and some guys I went to high school with, and John Schappert, started Tiburon. We started making Super Nintendo games, and then we started working on Madden when the contract came up after the other company didn’t ship the game on time. It was the best-selling game on PlayStation that year, which led to the acquisition by [Electronic Arts].

I stopped programming in 1998 or 1999. When I left EA, I was overseeing all sports development for Peter Moore, who was heading up the sports label, and I headed up development across Vancouver and Orlando.

What was the attraction to Zynga?

Chiang: In 2009, when I was thinking of joining Zynga, we had FIFA Ultimate Team, which was a card-based microtransaction mode. It was a $10 mode you paid for, and then you had $1.50 card packs. We quickly saw the microtransaction part of it surpass the $10 for the mode. So you reduce the $10 to free to reduce the friction.

Microtransactions and free-to-play seemed like the future, for sure. The second aspect was time. Having an hour to sit down and play a game is not easy to come by when you have a family, so, as a person who loves games, the idea of playing games for five to 10 minutes with friends was really appealing. I saw myself reconnecting with people from high school, and I saw my parents playing with my kids. The only game my ex-wife will play is Words With Friends, except for SingStar, a karaoke game on PlayStation.

When you are creating a place where women, children and older parents are all playing, it’s an incredible feeling and experience. It’s like the first time I saw “Star Wars” in the movie theatre — that’s what we are creating for people. That’s what we are trying to create on a day-in and day-out basis.

I’ve spoken to people before about the initial draw of Zynga being that so many people end up playing your game, unlike a console title that has a limited audience.

Chiang: Absolutely, in entertainment, you want to make hits. When you are working on sports games year after year, it’s not super appealing. But the idea you get to work on a game played by millions of people? That’s great.

I mean, I always tell people, you spend the same amount of time on a game that gets canceled as one that is seen by millions of people.

Do you believe the definition of a social game is changing?

I do. It’s a moniker, like casual gaming. We label stuff, but essentially the business model is free-to-play, and gaming has always been social. I look at us as doing free-to-play games on multiplatform.

For a while, social equaled Facebook.

Yeah, that’s how I interpreted it, as well. But when you look at Words With Friends, that’s what a social game looks like, where you are interacting with a friend on a daily basis.

Zynga and Facebook just changed their contract language, which is less restrictive and will free you up to do more things, right?

Chiang: I think Facebook is a really valuable partner. We struck a new agreement, which enhances our partnership in some ways, and allows you to invest more in our platform and mobile.

Everyone talks about gaming as a hits-driven business. Is it possible to sustain that over the long term?

Chiang: I think we’ve seen companies like EA and Activision be able to sustain [that]. There’s aways peaks and valleys.

With social, it’s more about gaming as a service — it’s a TV model, if you will. We continue to put out new content every week, and on Facebook every single day. That keeps our players engaged. There’s games like Poker that have been around forever. There are certainly franchises. It’s not that different from a Call of Duty or a Madden Football, which has been going on for 15 years now. We have some of the same characteristics in Poker and Words With Friends.

Tell me about the story arc for Zynga’s Villes. How come some are not as successful as the ones in the past?

What we’ve seen is a few different things. We are seeing consumer tastes changing, and there’s a player movement toward mobile gaming. If you look at just a single platform, you’ll see a peak or a leveling-off of gaming on Facebook. But we are seeing growth on mobile. As we go multiplatform, we may have peaks and valleys on a single platform, but we’ll see overall growth.

That seems to be a platform issue, but is there something about Villes in particular that is no longer popular?

Chiang: When I look at FarmVille 2, it’s reengaging a lot of players, and is off to a great start. There’s an aspect of something new, and so players are saying, “Let’s try that.”

A game like Pokemon peaked at a $1 billion business, but over time, it’s still a big business and it has sustained. Traditionally, you’ll see a massive pop and then it will sustain. It’s a great business, and when we put out great content like FarmVille 2, our players respond and they engage.

Let’s go back to the cross-platform approach. Zynga is going after both Facebook and mobile, and has restructured its leadership team around that. How has your job changed?

Chiang: I took over all of the games business, so I have every game on mobile and Web, and just recently I reorganized around our players and genres.

We have some great leaders, and some of the most experienced in social gaming in the western world. We are going to run our “Invest and Express,” which are our Ville games. We have a new group in PVP (player versus player), which is focused on men 18 to 34.

Then we have our casino group, which is poker and male-skewing, and we have slots and bingo, which is focused on women. And then we have our mobile casual group, which is focused around some of our big franchises, like Draw Something and Words With Friends.

Some critics say that Zynga’s games are not fun. What do you say to that?

Chiang: I think when you look at a game like FarmVille 2 or Elite Slots, we are driving new innovation, and we are continuing to push innovation. At the same time, if we change too much, players complain. We saw it in sports games, and you see it in social gaming, you want a consistent feel and familiarity. You don’t want to redo everything.

Zynga is such a data-driven company, I’m curious what metrics do you look at every day, and which ones are most important?

Chiang: We look at the net promoter score, where we ask players to rate the game from one to 10. A nine to 10 is a promoter, and below a six is a detractor. We certainly look at overall how many people are playing and what our retention is, especially after launch, to check out retention after seven days to see which way it’s headed.

Why didn’t The Ville do well? Zynga announced it was cutting back on it as soon as it went live.

Chiang: I think with The Ville, the team made a great effort. But we did not deliver.

Our players didn’t respond to it as we would have expected. We hit a high DAU (daily active user), but they did not retain as well as some of our other games. We looked at all of that, and applied that to our future games. When you are going for hits, we’ll also have some failures.

Do you have a mantra, or a way to rally the troops right now that makes everyone believe you can create another hit? Something to inspire them? How do you manage the turnaround process?

For us, it’s about focus and getting back to basics. Our team across the board has delivered hits. We’ve had a number of great game makers who have been tied up with games, and now they are focused on new projects. We are reducing the number of games we are making, and focusing on a fewer with the highest potential in Invest and Express, player versus player and casino.

With many departures over the past few months, does Zynga still have the talent to make good games?

Chiang: Absolutely. We had a lot of people joining before the IPO, and some of those folks have opted out, but the bench is still really deep. We are also still attracting a lot of folks. Social is not for everyone, so some people came here to try something, but the future is really bright. We have a strong network of players on Facebook and mobile, and a number of great games in the pipeline that should be — and we’ll see how they do — but are going to be really fun and social.

Is there a message that you’d like to get out to people on Zynga’s game creation? Do you think there is an impression people have that you’d like to correct?

Chiang: I never thought about that. I firmly believe that we have a huge bright future and have the best position for talent, and in terms of our network and in terms of mobile and Facebook players to drive the biggest and best entertainment in the world. We are well-positioned that way, and hopefully you’ll see things in the future that will surprise and delight a lot of people.

While at Zynga, Chu worked as a general manager of the company’s mobile divison, responsible for operating massively popular games like Words With Friends and Scramble With Friends. Before that, he worked on Zynga Poker, FarmVille, PetVille and the company’s own portal at Zynga.com.

“This is an opportunity to pioneer this business, and this was too good to pass up,” said Chu, who left as part of a mass exodus from the struggling publicly held company. Zynga’s first game was Poker, and it was the granddaddy of all its games. It’s the most steady, and the demand is always there.

Betable is currently licensed by the gambling commission in the U.K., where its servers are located. Since any gambling on its platform technically occurs in that country — on its servers — it can legally operate most anywhere. However, Betable, which also has offices in San Francisco, is self-electing to stay out of certain areas, like the U.S., where online gambling is expressly prohibited — at least for now.

Betable is not building its own games, but rather making its technology available to third parties interested in diving into the real-money world. The obvious benefit to any developers is that they will not have to go through the lengthy process of getting their own licenses, or facing regulatory scrutiny, because Betable has done all that hard work.

The company recently announced that Big Fish Games has launched a Betable-powered real-money version of its hit iOS title Big Fish Casino in the U.K. It has also signed up other game studios, including Slingo, Digital Chocolate and Murka Games, to its private beta program. Currently, Zynga is not yet working with Betable, but has signed a partnership deal with Bwin.party, a real-money gaming operator in the U.K., to launch an online gambling site. Betable takes a share of the revenue.

Chu said he’s hopeful that the steady stream of revenue that comes from real-money gaming will give game companies the capital to reinvest in making new games, since it monetizes so much better than normal social or mobile games. “The real problem is that it’s a hits-driven business, and if you don’t know where it’s going, you’ll be forced to copy successes in the market,” he said.

Betable’s CEO & founder, Chris Griffin, said they are targeting mobile games first. “Every industry is being affected by the transition to mobile. It’s definitely here, but the only thing that’s holding back innovation is the license.”

Betable, which was founded in 2011, now has 18 employees. Other recent hires include Jeffrey Kalmikoff, head of user experience, and Mike Malone, head of engineering. There are also employees from Klout, Electronic Arts  and Gree.

For Zynga, which has struggled to develop a new hit game recently, the strategy has two aims. Obviously, it wants to generate more ad revenue. But, just as important, it wants to give game developers a reason to work with its CEO and founder, Mark Pincus.

Multiple sources familiar with the company’s plans say the platform is still under development, but some of the components could launch by the end of the year. It may not be available to third-party developers immediately. A Zynga spokesman declined to comment.

Up until now, the social game maker has been slow to adopt advertising, opting instead to rely on the sale of virtual goods for the bulk of its revenue.

The advertising efforts will be a part of its push into third-party publishing and will be used as another way to attract developers looking for a complete package when it comes to bringing games to market. Sources said the initiative is being headed up by the company’s long-time CTO, Cadir Lee, who has also been in charge of other major platform projects, including the build-out of its own cloud network.

Over the past year, Zynga has been slowly ramping up its advertising efforts. Recently, it announced a deal where Words With Friends players were rewarded for using Honda-related words on their game board. Another example: A virtual State Farm blimp that players used in FarmVille to revive crops.

Last quarter, ads generated $41 million for Zynga. That’s up 170 percent year over year, and represents 12 percent of the company’s overall revenue.

The spike in advertising over the past year likely has a lot to do with the acquisition of OMGPOP, which was generating massive amounts of ad inventory at the peak of its hit game Draw Something.

But it’s not enough. Earlier this month, Zynga updated its full-year guidance, saying that revenue will fall below previous expectations for the second time this year. Zynga will report final results for the third quarter on Wednesday.

So, what could a Zynga-built advertising platform look like?

The platform could enable the company to expand beyond brand integrations and sponsorships into more lightweight experiences, including banner ads, interstitials, video pre-rolls and incentivized downloads. While it will span both Facebook and mobile, it will likely focus more on mobile games, since Zynga has repeated over and over again that they don’t bring in as much revenue as its social games.

To bolster its efforts in the space, back in April Zynga hired Julie Shumaker (formerly of RockYou and Electronic Arts) to be the VP of global ad sales. Since then, sources say, Zynga has hired a few more direct ad sales employees, and lists several more job openings on its Web site, including roles for sales managers and directors.

It is not entirely clear why Zynga is choosing to compete with so many ad platforms that already exist today, but according to sources, there are a few benefits that may outweigh the costs.

For starters, it will keep more of the revenue that way, without having to work with a middleman — important for a company that has been forced to give 30 percent of its virtual-goods revenue to Facebook.

Another theory is that Zynga wants to ensure that it owns all of its own data. Zynga has an incredibly large audience — roughly 300 million monthly active users — and a lot of rich information about them in terms of their behaviors and their social graph.

It’s the latest of several options that have been floated, including whether Facebook or others might try to swoop in to buy the company.

Most of these scenarios are moot, given Zynga’s founder and CEO Mark Pincus controls the troubled company, owning more than half of its shares. It is not clear if he would be willing to give up now.

That said, he has do something — the company’s stock hit a new low on Friday, tumbling 12 percent to $2.48 a share. At that price, investors are valuing the business at very little, since Zynga has the equivalent of $2.10 a share in hard assets.

That price could get lower, with Wall Street investors and many others becoming even more relentless in their criticism of Zynga.

There have been many concerns already that began after its once close partner, Facebook, changed the way it operates, with the result that its platform did not perform as well as it once did for Zynga, especially for its once popular Ville-style games.

It’s been made worse as consumers continue their shift to mobile, which Zynga says does not always monetize as well as Facebook.

To add to the pile, Zynga has suffered mass exodus of talent, some for better and some not. Over the past few months, it has lost several high-ranking managers, including its COO John Schappert and Chief Marketing Officer Jeff Karp, who were both brought on board for their experience in gaming. Last week came the departure of Paul and David Bettner, the creators of Zynga’s enormously successful Words With Friends franchise.

There was plenty of other fodder for criticism this past week, after the company also wrote down the acquisition of OMGPOP by as much as $95 million, or about half of the total price.

In a memo issued to employees on Friday, Pincus wrote that he was disappointed and is focused on rectifying the situation.

In the near term, he said it might mean considering “targeted” cost reductions. And in the longer term, he noted that Zynga would have to invest more in mobile and a platform approach that enables it to publish third-party game titles.

Whether he can do that easily with intense shareholder scrutiny is questionable, and ditching the public markets would have its advantages.

To get a sense of where Zynga stands, and whether going private is feasible, I talked to a handful of analysts and experts, all whom had mixed opinions.

Michael Pachter, Wedbush Securities:

At this price, yes, Zynga can go private, but I don’t think that will happen. That would trigger more unrest by shareholders, who would say you sold shares at $10 and now you want to buy them back at $3? It would have the appearance of some sort of scheme.

If he [Pincus] wants to send a signal to investors that they are done making acquisitions — since they obviously didn’t do a very good job at it — they should take some of its war chest and buy back stock. He should also personally buy stock. We need to see that kind of commitment.

Peter Relan, executive chairman of CrowdStar, which pivoted from social to mobile gaming this year:

I have three solutions: Mobile, mobile, mobile. Mobile gaming this year globally is a $2 billion to $3 billion business and is expected to hit $18 billion by 2016. I don’t think there’s a lack of growth in gaming; it’s more product strategy.

Mark is a competitive guy and he’s going to fight like hell to transform the company and take it to the next level.

Arvind Bhatia, analyst, Sterne Agee:

They need to restructure the business significantly and do it very quickly, too. We think that they are considerably overstaffed for the level of revenue that they’ll be generating in the coming years.

They need to right-size and preserve the cash. Going private won’t solve the problem … the question is, where will the cash be in a year from now?

Rich Greenfield, analyst, BTIG:

They will generate zero EBITDA in the back half of 2012 based on their new guidance and earnings in 2013 and beyond are totally unclear — the company’s assets are literally walking out the door — you see the Words With Friends team left.

Why would they want to lever up and go private — sounds petrifying … Zynga clearly has no idea how to model/project their business/earnings, in turn, going private would appear to be a very dangerous move, don’t you think?

They need to make great games that have staying power.

But don’t get the “With Buddies” games confused with Zynga’s “With Friends” franchise, which has such well-known hits as Words With Friends and Scramble With Friends.

Scopely was founded by AdSense co-creator Eytan Elbaz, Walter Driver and Ankur Bulsara, and has been operating in stealth mode since last year, an announcement that my colleague Liz Gannes teasingly wrote about here.

The caliber of the team shows how intense the mobile games race has become, and is precisely why Zynga will have a hard time dominating the top of the charts like it did on Facebook.

Investors in Scopely’s round include Anthem Venture Partners, The Chernin Group, Greycroft Venture Partners and New Enterprise Associates (NEA). Many other well-known angels also participated, including former Yahoo CEO Terry Semel and Buddy Media CEO Michael Lazerow.

Check out Scopely’s Web site to see its credentials in excruciating detail, or read the full release below:

Scopely Closes $8.5 Million in Seed Funding Led By Anthem Venture Partners

LOS ANGELES, CA – September 19, 2012 – Scopely, the mobile developer/publisher founded by AdSense Co-Creator Eytan Elbaz, Walter Driver and Ankur Bulsara, today announced $8.5 million in seed financing. The round includes primary investors Anthem Venture Partners, The Chernin Group, Greycroft Venture Partners and New Enterprise Associates (NEA).

Samit Varma of Anthem Venture Partners said, “We had been tracking the Scopely team for months so we were very interested when we had the opportunity to get involved.  As we dug in further, we were really compelled by their differentiated vision of the intersection between social, mobile and games. The team they’ve assembled and the traction they’ve seen to date is quite impressive.”

Other notable investors participating in the round include: former Yahoo CEO Terry Semel; ShoeDazzle and Honest Company founder Brian Lee; Buddy Media CEO Michael Lazerow; LiveRamp CEO/Rapleaf Chairman Auren Hoffman; Red Swan Ventures; Double M Capital Managing Partner Mark Mullen; Amplify Co-Founder/Accel Venture Partner Richard Wolpert; TechStars CEO David Cohen; TechStars NY Managing Director David Tisch; Burstly CEO Evan Rifkin, Sands Capital, Factual CEO Gil Elbaz and Aydin Senkut’s Felicis Ventures.

“We’re thrilled to be working with such a distinguished group of investors.  We are big proponents of the Los Angeles startup ecosystem so it’s great to have investors like Anthem, Greycroft and The Chernin Group who are based in LA and have unique expertise in the digital media space involved,” said Walter Driver, co-founder and CEO of Scopely.

Scopely has been operating in stealth mode since last year, quietly amassing an all-star team of 30 engineers, data scientists and product managers.  The company will use the additional capital to accelerate growth and expand its product offerings.

Scopely’s With Buddies franchise of multiplayer games has grown rapidly to millions of active users. Current With Buddies titles available in the AppStore include: Dice With Buddies and Jewels With Buddies.

About Scopely
Based in Los Angeles, California, Scopely develops and publishes mobile social applications including the With Buddies franchise of multiplayer games. Founded in 2011 by Eytan Elbaz (Applied Semantics, Google), Walter Driver (O Negative Media) and Ankur Bulsara (MySpace), the company has received $8.5 million in seed financing to date.  To learn more, please visit www.scopely.com.

Companies normally get a lift when they exceed estimates, but in this case, investor confidence has been so low that some think a meet will be enough to change the tide.

“We expect Zynga to deliver in-line 2Q bookings, which we think is enough to move the stock higher given sentiment in the name remains weak,” according to a note sent on Monday by J.P. Morgan analysts.

Yesterday, Zynga’s stock closed at $5.09 a share, up 6 percent for the day, but down 63 percent over the past four months.

For the second quarter, analysts are estimating bookings of $345 million and non-GAAP earnings per share of six cents a share, representing little to no growth over the previous quarter, when it reported a profit of six cents a share, excluding some items, on bookings of $329 million.

Bookings are what Zynga actually sells in the quarter versus revenue, which is amortized over multiple quarters. It reports these two figures because virtual goods are perceived as having a long shelf life. Bookings are often considered a better measure for how the company did during the immediate period.

Over the past five years, the company has become the largest game maker on Facebook, attracting 292 million users in 175 countries, based on producing hit games such as FarmVille, CityVille and Words With Friends. But as Facebook’s growth has plateaued (which has also been a problem for its own stock), investors have become concerned that Zynga won’t be able to keep accelerating as fast as it once did.

Last month, the company revealed its upcoming plans at Unleashed, which included the announcement of new games such as The Ville and FarmVille 2, a sequel to one of its most popular games. It also talked about its strategy for becoming a publisher of third-party game titles across both Facebook and mobile, but generally, it wasn’t enough to get investors excited enough to buy.

Since then, the company’s CEO Mark Pincus has been eager to talk about the company’s goal of achieving one billion people playing its games.

Last quarter, Zynga warned that it expects slower sequential growth in the first half of the year, with most of its growth weighted toward the second half.  For the full year, Zynga is projecting non-GAAP earnings of 23 cents to 29 cents a share on bookings in the range of $1.4 billion to $1.5 billion. Tomorrow, analysts will be looking closely to see if those projections have changed.

J.P. Morgan suggested that concerns over the company’s growth rates are overblown, and is slightly more bullish than the consensus. Based on information from AppData, which tracks the popularity of apps on Facebook, J.P. Morgan says that the number of people playing Zynga’s games on a daily basis has increased 2 percent quarter over quarter. Additionally, it noted that data only paints one piece of the picture, because AppData doesn’t take into account how many users come from mobile, and that mobile accounted for one-third of Zynga’s total daily users last quarter.

One concern that multiple analysts mentioned was Zynga’s staggered lock-up expirations. Since going public, the number of shares available to trade has increased to 600 million from 100 million, and by mid-August, the so-called float should jump to around 800 million shares. More shares will mean having to please even more investors.

ZNGA data by YCharts

The event, starting at 10:30 am PT, will be hosted by the company’s CEO Mark Pincus at its swanky San Francisco headquarters. As usual, the canine-friendly company has invited both the press and their furry friends to attend.

But the social game maker has been fairly tight-lipped about what it will be announcing. Last week, it sent reporters red boxes, consisting of only an invitation folded into the shape of a paper airplane. The message was cryptic, but I’m taking it to mean that the company is hoping for its next set of products to really take off.

Indeed, Zynga — which is known for social game hits on Facebook like FarmVille, CityVille and Words With Friends — is probably looking for a catalyst. The company’s stock traded higher today based on buzz ahead of tomorrow’s event, but it is still down 40 percent since its IPO in December.

It is certain that Pincus and other executives will introduce a number of new mobile and social games onstage tomorrow. Included in that, we will likely see a game or two from its supremely popular ’Ville franchise, as well as games from the company’s two major genres, including casino and arcade. Any mobile announcements will be particularly important as smartphones become a significant driver of growth going forward.

I will also be keeping a lookout for an update on its Zynga.com platform, which was announced eight months ago as part of the company’s first “Unleashed” event. Zynga.com is a place other than Facebook for users to play games.

Since it launched in March, the platform has added seven games for users to play. Tomorrow, I’d expect Zynga to announce its own next wave of titles, as well as titles from third-party developers.

As the company adds games, it will be relevant to track the number of users attracted to the platform. While likely not a huge number yet, especially compared to its more than 50 million daily players on Facebook, it may be large enough to start attracting advertisers. Just last week, the first Facebook ads started appearing on Zynga’s network, hinting that it could soon be significant. (One ad I saw today was for doggyloot, a daily deals site offering 70 percent off toys and treats for dog owners. How appropriate!)

Whatever the company announces, however, I expect tomorrow’s event to be similar to Zynga’s first Unleashed event eight months ago, where it announced 10 new products, including a slate of new mobile games, a new ’Ville title and Zynga.com, which at the time it was calling Project Z. After the announcements, the company allowed press to get some hands-on time with some of the games.

The one big difference last time was that the company was getting ready for its IPO, and therefore, it was officially in a quiet period. This year, I expect Pincus to have a bigger presence since the gag has been lifted.

In fact, consumers are now spending equal amounts of time social networking and playing games, according to Flurry, which provides tools to app developers to track consumer behavior.

In the first quarter, Flurry found that the average consumer spent 24 minutes on games and social networking — each — every day. In the same period a year earlier, consumers spent 25 minutes playing games and only 15 minutes social networking.

In a blog post, Flurry’s Peter Farago explains that while time is now evenly split, the shift is more severe when you calculate the percentage of time spent on each type of application. By doing so, you can see that time spent on gaming has dropped as overall usage on phone applications has increased from 68 minutes a day to 77 minutes a day.

In the first quarter, consumers spent 31 percent of their time playing games, falling from 37 percent a year ago. Likewise, social networking has soared from 22 percent to 37 percent.

Social networking on the phone would include Facebook and other applications like Instagram (which Facebook just acquired for $1 billion). Games include everything from Rovio’s Angry Birds to Zynga’s Words With Friends. Other popular phone categories include news and entertainment.

Flurry also discovered that advertisers have followed the change in behavior with more ad revenue being generated by social networking apps than games. In April, 37 percent of ad revenue went toward social networking apps versus 36 percent going toward games. Just two months earlier, games were generating 35 percent of ad revenue and social networking was generating only 24 percent.

One limitation of the study is that it is looking only at smartphones and does not take into account behavior on tablets, where a lot of gaming is taking place.

Yesterday, Nintendo reported an annual loss — its first in more than three decades — after revenues fell 36 percent. Hours later, five-year-old upstart Zynga reported nearly the opposite results, saying that first-quarter revenues jumped 32 percent year over year.

“Social, accessible and free are changing things,” said Zynga’s COO John Schappert in an interview. “We were built for this market; we live on free and in-app purchases. We never grew up on $60 games and consoles. It’s a different world, and it’s hard for some companies as they make the transition.”

For more than a year, the game industry has worried about the shift toward social and mobile from more traditional platforms like the home console. And now, after yesterday’s two drastically different financial reports, there is more than anecdotal evidence for concern.

Zynga continues to gain momentum and attract larger audiences with titles like FarmVille and CastleVille on Facebook and Words With Friends on mobile. On the flipside, Nintendo is facing yet another hardware cycle, with consumers waiting for its newest console, the Wii U, coming later this year.

Generally, experts believe that social and mobile games are expanding the overall games market. But yesterday it was hard not to see Nintendo’s first loss in three decades — totaling $531.1 million — as a hint of where things are headed.

Michael Pachter, an analyst with Wedbush Securities, is bullish on Zynga’s prospects but is not optimistic about the future of console games.

“Nintendo is living in the past, repeating what got them to where they are, and hoping that the recent downturn is a fad,” he said. “They aren’t adapting to the times, and it’s hurting them.”

To be fair, the companies approach the market completely differently, so it’s hard to compare the two.

Nintendo sells proprietary portable and home gaming units as well as the games that work on top of them. Meanwhile, Zynga gives away its games for free and lets them work across most computers and mobile phones. It makes money on advertising and microtransactions.

The two approaches lead to drastically different audience sizes.

Zynga said the number of monthly active users playing its games increased to 292 million in the first quarter, up 24 percent. The game company, which got its start on Facebook, is also expanding rapidly to mobile, reporting that it had 22 million monthly users on mobile, up from only 12 million one quarter ago.

Nintendo does not break out quarterly figures, but the number of new customers it reached during its fiscal year pales in comparison. Over the past year, it sold 13.53 million 3DS units, and expects to sell 18.5 million this year. Nintendo sold 9.84 million Wiis over the past year, down 35 percent.

This year, Nintendo is banking on the Wii U to revive the company and to better position itself against mobile devices like the iPad. The new console will come with a 6.2-inch touchscreen that will allow users to interact in a new way with games on TV screens. It plans to sell 10.5 million Wii units this year, including the Wii U.

Last year, Nintendo Global President Satoru Iwata told AllThingsD in an interview that he is not willing to gamble on free-to-play games, because consumers are willing to pay for Nintendo’s superior experiences and brands.

“If we were simply going to say okay, the only the way we could sell more products is by decreasing the price, then there wouldn’t be a bright future, and the entire industry will fold,” he said.

His point is not entirely lost.

Zynga makes far less money per user than Nintendo. In fact, the gap between them is enormous.

Each console or portable game unit Nintendo sells has the opportunity to generate hundreds of dollars in income, since console games cost $60 and portable games cost around $40 (not to mention the initial cost of the hardware).

Meanwhile, Zynga makes very little on each player. It reports a metric called average daily bookings per average daily active users (ABPU). Yesterday, Zynga said ABPU increased to $0.055 in the first quarter from $0.051 in the same period a year earlier.

For Nintendo to switch from one model to the other would be like giving up the farm.

And to be entirely fair, Zynga wasn’t profitable, either. In the first quarter it lost $85 million, primarily due to stock-based compensation.

The top ranking will go a long way in quieting the critics who believed Zynga was foolish to acquire OMGPOP for $180 million on the day of Rovio’s big launch, only to see it fall to second place the next day.

In addition to climbing its way back to the top, Zynga also disclosed that the game has now been downloaded more than 50 million times in 50 days, making it the fastest-growing mobile game ever — or so it believes.

In other words, that would be like everyone in England downloading the app in less than two months.

While it still may end up being true that Zynga overpaid for OMGPOP, there is little doubt that the game is an overnight success.

If you are one of the few people who haven’t already played it, Draw Something challenges players to use their finger to draw a picture of a person, place or thing; for example, “hoodie,” “golf cart” or “Rihanna.” The completed picture is handed off to another player, who must guess what is being drawn, sort of like Pictionary.

Inside the game, players can pay for additional features, such as new colors that can help make the illustrations easier to guess, new words if they don’t like the choices that are presented to them, or bombs that will eliminate some of the letters to make guessing an illustration easier. The free version has ads; users can pay 99 cents to get rid of them.

Zynga also said that since the game launched, more than six billion drawings have been created (that’s 120 for every resident of England), and that at the game’s peak hours, it generates 3,000 drawings per second. The most popular words are “starfish,” “pregnant,” “six-pack,” “Hangman” and “boom box.” The least popular word is “latrine.”

The mobile game also registers as the most popular game on Facebook, because it allows people to log in to the game on the phone using their credentials.

However, people do not have to register using Facebook, so the number of players using it is actually bigger than what’s being reported by AppData, which tracks application usage on Facebook.

Still, AppData reports that the game has 14.4 million daily active users, where it has plateaued for the past week. The next most popular game, also owned by Zynga, is Words With Friends, which draws about eight million daily users, slightly more than half of Draw Something’s crowd.

Yesterday, it acquired OMGPOP, the developer that suddenly unseated the social game giant after its overnight success with Draw Something.

Draw Something, which challenges players to guess what another person is drawing, much like Pictionary, has been downloaded more than 35 million times in the past six weeks.

In the words of OMGPOP’s CEO Dan Porter, that’s pretty “Drawsome!”

But in making the acquisition, Zynga may have inadvertently set the expectation that if it doesn’t create the No. 1 game on Facebook — it will acquire it.

In this case, that wasn’t a cheap thing to do.

Zynga declined to say how much it spent on OMGPOP, but our sources say it paid $210 million, including $30 million in employee-retention payments. 

The message Zynga is sending with this acquisition is that it is committed to having the most popular games — a difficult and expensive proposition, especially if acquisitions are always the answer.

Just ask Porter how difficult it is. It took him 34 attempts and six years to build a hit.

“You are always trying to figure out what everyone wants,” he said in an interview. “But a hit is a hit for reasons that are hard to understand. I’ve told investors before — if I could, I would only make those games, and not the other games.”

Porter likened it to the music business, where he started his career. While busy signing every hot band he could find, the unexpected runaway hit was the “Dirty Dancing” soundtrack.

Still, the stock market rewarded Zynga’s decision yesterday, sending the company’s stock up about 5.3 percent, to $14.45 a share, after getting confirmation of the acquisition at noon. However, by the end of the day, enthusiasm waned, and shares closed at $13.72 a share.

Since going public in December, it’s been a rocky ride for Zynga.

After raising $1 billion to make it the largest Internet IPO since Google, it has traded as low as $7.97 and as high as $15.91. Based on yesterday’s closing price, the stock is now up 37 percent.

Acquisitions are hardly a new strategy for the company.

Last year, it set a pace of buying more than one company every month, seeking both employees and new games to maintain its rapid growth rate.

In this case, OMGPOP’s 40 New York employees will join forces with Zynga’s existing New York office, and Porter will become the new VP and GM.

What really stands out about this acquisition is the price — at $210 million, it’s the most expensive company Zynga has purchased. Prior to this acquisition, Zynga’s largest buy was the $53 million purchase of Newtoy, the developer behind Words With Friends.

That’s not to say that Zynga hasn’t attempted other big purchases. In 2011, it courted Rovio, the maker of Angry Birds, and unsuccessfully bid for PopCap, which instead sold to Electronic Arts for $750 million.

Although Draw Something has been proven to be astonishingly popular in the short term, it doesn’t have the same kind of track record as Rovio or PopCap.

The mobile game sits atop the iTunes “top paid,” “top free” and “top-grossing app” lists, an unusual accomplishment. On iTunes, it beats every single Zynga title — including Zynga Poker, which is frequently one of the highest-grossing apps.

As mentioned at the top of this post, Draw Something is also the most popular game on Facebook. However, what’s interesting is that the game isn’t available on the social network. Instead, it uses Facebook credentials as a way for players to register on their mobile phones.

From what we’ve heard, it has also been generating a lot of cash, based in large part on in-app purchases made by players. People familiar with the company told my colleague Peter Kafka that it has recently been netting around $250,000 a day from the game — after Apple takes its 30 percent cut.

In an interview, Zynga’s Chief Mobile Officer David Ko said OMGPOP’s acquisition represents more than a hit game for the company.

“It was about the team and how well we connected,” he said. “We found a great leader in Dan, and an amazing team around him. I couldn’t be happier in partnering with the team.”

Indeed, that’s Drawsome.

The move is supposed to foster a more social gaming environment that’s focused just on games, without other social media updates getting in the way.

Zynga is also opening up its game platform — which consists of 240 million monthly active users and 54 million daily active users — so third-party developers can create their own Zynga games. Developers will have access to something called Zynga’s Active Social Network, or ASN, which will tell them not only how many people are playing their games but also measure engagement levels.

So what about Zynga and Facebook’s codependency? While it may initially seem as though Zynga is staking an independent claim, it’s still cozy with Facebook when it comes to its own gaming site.

Users will still have to log in to Zynga.com through Facebook Connect in order to play the games — which will include CastleVille, CityVille, and Zynga Poker. (And, for fans of the Words With Friends mobile app, it’s going to be available on Zynga.com, as well.)

Players can start a game on Zynga.com and then easily pick it up on Facebook, and vice versa. There are still the same sharing functionalities, in terms of sharing scores and progress.

In terms of revenue sharing, it’s unclear whether Facebook will glean revenue from ads on Zynga.com. Zynga.com will launch with ads, a Zynga spokesperson confirmed, but said the company is not revealing financial details at this time.

However, while Facebook hasn’t been sharing revenue with Zynga from ads that appear on its own social network, there are agreements in place for Facebook in the future to sell advertising on a site hosted by Zynga, according to a story my AllThingsD colleague Tricia Duryee wrote.

There are some notable ways in which Zynga’s own gaming site differs from the experience of Zynga games on Facebook, though. Zynga.com offers a clutter-free news feed that’s only about gaming, unlike a Facebook feed dotted with Zynga game scores amid status updates and photos of food experiences and kids in Halloween costumes. There’s also a live chat box for real-time communication among game players, which, unlike Facebook’s IM box, keeps the game going while you’re chatting; and Zynga players can become “zFriends” with each other, without having to be Facebook friends.

“We know that our users, whether it’s for gaming or not, spend time on Facebook,” Manuel Bronstein, general manager of Zynga Direct, said. “They wake up in the morning, they check Facebook. And the reality is, we need to reach the players wherever they are.”

Bronstein stressed that the company wanted to keep gamers active by creating a truly social gaming portal and by adding more games from outside developers. In some cases, Zynga sees a big dropoff in engagement when a player is waiting days or longer for a friend to play their turn, or send a gift back. The company is hoping that, by creating more of a multiplayer environment, it can expedite the wait time in between plays and just keep people playing.

Zynga first unveiled its plans for “Project Z” back in October 2011, alongside 10 new games. The company said then it would still be a Facebook Connect-enabled platform, but also said it would be an environment tailored just for games.

As was pointed out at the time of the Zynga event, there were a few areas of gaming that Zynga had not yet entered, which had left opportunities for competitors to succeed on Facebook. With Zynga’s new games and the plans for “Project Z,” the gaps narrowed.

In Facebook’s recent S-1 filing, the social networking giant revealed just how dependent it was on Zynga, with Zynga accounting for around 12 percent of Facebook’s $3.7 billion in revenue last year. Facebook said social games are currently responsible for “substantially all of” its revenue generated from payments (outside of advertising revenue.)

Zynga, the publisher of social games such as Words With Friends and FarmVille, went public in a $1 billion offering in December, one of a number of young Internet companies to stage an IPO of late.

Read the rest of this post on the original site »

Eventually her opponent, Charles Briggs, became her boyfriend. Up to that point, the two hadn’t met in person. She lived in Texas, he lived in Arkansas. They met through the “random opponent” feature of Words With Friends, which matches up anonymous players.

Read the rest of this post on the original site »

In other words, we could see a board game of FarmVille, Words With Friends or CityVille in the not too distant future. In addition, we could potentially see action figures based on some of its game characters.

Merchandising around videogames is not new, and has recently spread like wildfire to mobile and social gaming with rising stars like Rovio’s Angry Birds or ZeptoLab’s Cut the Rope.

In a press release, Zynga says Hasbro has obtained the license to develop and distribute a wide range of product lines based on Zynga’s game brands, but does not get into too many details.

It also says the deal covers opportunities for co-branded merchandise featuring a combination of both Hasbro and Zynga brands, it said. Could we see a co-branded Words With Friends Scrabble game?

Hasbro already has a long-standing relationship with Electronic Arts, which publishes such titles as Scrabble and Monopoly across many platforms.

In a statement, Zynga’s CEO and founder Mark Pincus said, “This partnership is so special because it represents an exciting leap forward in enabling people to connect their virtual and real worlds. Hasbro has inspired play through their famous toys, games and action figures and we look forward to working with a company that continually creates meaningful and fun brands.”

The two companies said the first products will hit shelves in the Fall.

The game, which is a take on Scrabble, has been working its way into the cultural fabric, as Zynga is happy to remind us with a lighthearted list of milestone moments, including Alec Baldwin’s meltdown that led to getting booted off a plane (see the entire list below).

But yesterday, it became part of one of America’s biggest pastimes: Football.

If you were watching the Super Bowl, you may have briefly seen Words With Friends creators and brothers Paul and David Bettner in a cameo performance during Best Buy’s commercial. The funniest part is that they get busted for playing on a plane.

In addition to Zynga, the commercial also noted other mobile innovations, including inventors from Shazam, Square and Instagram.

Words with Friends was acquired by Zynga through the purchase of Newtoy and is actually part of an entire franchise of games that includes Chess With Friends, Hanging With Friends and the latest addition, Scramble With Friends.

In Apple’s App Store for iPhone, Words With Friends has regularly been the leading game in the word category since 2010, until Hanging With Friends became the leading game in June 2011. In August 2011, Zynga released Words With Friends on Facebook, where it has continued to be one of Zynga’s top 10 most popular titles. Currently, it ranks sixth, with Hanging With Friends now placing at 10th.

In fact, the Words With Friends franchise as a whole likely represents the company’s most played titles, even if it doesn’t monetize as well as other social game titles, like FarmVille, Poker or CityVille. A company spokesperson declined to comment.

In recognition of Words With Friends and its appearance in the commercial, here’s Zynga’s list of the game’s biggest cultural moments:

1. In the words of Jamie Lee Curtis, waiting for a word is “like a young lover waiting for words from her beau.”
2. It’s credited for being a matchmaker and a flirt because strangers can play each other and chat.
3. It helped save lives (See Gizmodo story here.)
4. Celebrity couples do it every day (Alec Baldwin is the best example.)
5. It’s the subject of ‘rapper braggadocio’ — word up, Fabolous and Big Boi.
6. John Mayer tweeted, “Words With Friends is the new Twitter.”
7. Finally, people no longer have to think you’re talking about wrestling or pandas when you type WWF.
8. The New York Giants are fans. (See the WSJ story.)
9. It became an official FAA violation when one smart celeb got kicked off a flight. (See above.)
10. And finally, the game co-starred in a Superbowl XLVI commercial.

And here, if you missed it, is the commercial:

“What?” Tuck said, searching the locker room last week for DeOssie, the Giants’ long-snapper. “I went to Notre Dame, you know.”

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Facebook said today in its filing with the Securities & Exchange Commission that Zynga accounted for approximately 12 percent of the company’s revenue last year when Facebook’s revenues totaled $3.7 billion.

The revenue came from both its 30 percent payments processing fee related to the sale of virtual goods from games, such as FarmVille and Words With Friends, but also from advertising purchased by Zynga.

Additionally, Facebook said Zynga’s apps generate a large number of pages on which it displays ads from other advertisers.

The dependence on Zynga is so significant that Facebook warns that if it fails to maintain its relationship with the game maker, or if Zynga’s popularity declines, its financial results may be adversely affected.

Even more notable perhaps is that it’s not just Zynga. Facebook said social games are currently responsible for “substantially all of our revenue” when it comes from payments.

In December, Zynga went public, raising $1 billion, and is obviously one of the companies most reliant on the social network. But now with Facebook’s financials also public, we can see that the two companies are actually interdependent.

And, in fact, over the past three years, Zynga’s importance has only increased. In both 2010 and 2009, Zynga accounted for less than 10 percent of Facebook’s revenues.

The big turning point occurred in May 2010 when Zynga agreed to use Facebook Credits as its primary payment method inside games. As part of that, Facebook would collect 30 percent. That contract will expire in May 2015.

Some of the details of that contract were disclosed as part of Zynga’s public offering, but we wouldn’t be surprised if Facebook is also required to publish it at some point. In the version Zynga released, a lot of the contract was redacted.

In after-hours trading, Zynga was trading about 4 percent higher to $11.02 a share, nearing it’s all-time high of $11.50.

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Like political junkies waiting up for election returns (losers!), Silicon Valley folks, including tech journalists (losers!), are up this morning to await and then pounce on the long-expected IPO filing of Facebook.

But, several sources said, the social networking giant — as I have previously reported — will likely not file its copious documents until this afternoon, after the markets close, at the earliest.

In other words, my day is shot. Thanks, Dave Ebersman!

Sources said the filing could even possibly slip a day, as the company’s suits get busy with dotting all the I’s and crossing the T’s.

That’s unlikely, though — Facebook was actually founded the first Wednesday in February of 2004, like today eight years later.

Sentiment from the not-very-sentimental co-founder and CEO Mark Zuckerberg? Awwwwwwww …

And, if those dudes rush, we might even see all the deets of the Silicon Valley darling’s finances and other info — including who’s got what shares and who doesn’t — earlier today. But don’t count on it.

That’s right — Facebook is sucking up even more of your precious time, and it is not even fun like beating your mother at Words With Friends or creepily poking old flames.

Facebook, Web 2.0′s most successful start-up, is expected to raise many billions of dollars on a valuation of tens of millions times that.

In other words, blah, blah, blah until we get the real numbers …

To send you off to IPO dreamland until then, here’s the genius viral video reading of the book “Go the F**k to Sleep,” read by Samuel L. Jackson:

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At one point today, the stock dipped as low as $7.97 a share before closing at $8 even.

At that price, it is $2 below it’s initial stock price of $10, and has lost at least 20 percent of its market value in less than a month.

But why?

The San Francisco social games company has launched at least two new games since going public, and over the past few days, no harsh analyst report has come out with a negative rating.

It appears the once high-flying Silicon Valley company — known for addictive games on Facebook like FarmVille and CityVille, and mobile games like Words With Friends — is having a hard time gaining the market’s confidence.

To be sure, there’s no clear answer for the price drop; and other tech companies that recently went public, such as Groupon or LinkedIn, have experienced their own fluctuations. But there is one theory making the rounds.

Analysts and other sources suspect Zynga’s stock has been propped up over the past month by the underwriters, who agreed to buy shares if the stock started to perform poorly. The stock purchases would have created steady demand for the stock and kept the price relatively stable.

Furthermore, the theory goes, the underwriters have since met their obligations for buying the stock, and therefore are are no longer buying as many shares.

Incidentally, on Friday, Morgan Stanley — one of Zynga’s underwriters — disclosed that it had purchased nearly 16 million shares in December.

But while the disclosure, filed with the with the Securities & Exchange Commission, adds fuel to the theory, it is unclear if those shares were purchased as part of the IPO, or if they were spread out throughout the month.

Zynga declined to comment, citing its quiet period.

Still, whatever the reason for the drop, Zynga’s shares are seeing less demand.

As recently as last week, the stock was trading at $9.45 a share, but since then, it has struggled to stay above $9. On Friday, it lost 12 cents; today, it lost 81 cents, or 9 percent.

But even if the underwriting theory is on the mark, it doesn’t explain the broader question of why Zynga’s stock price is falling. Shouldn’t there be other investors who are willing to buy up a piece of Zynga?

Unfortunately, it seems the market isn’t sure what to do with the stock, or how to value it.

A social games company fits somewhere between traditional game makers, like Electronic Arts and Activision; and an Internet stock, like Google or LinkedIn.

Zynga gives away its games for free, but still manages to be profitable from selling virtual goods, such as a tractor or more power-ups, that a small number of players elect to purchase inside the games.

It’s also heavily reliant upon Facebook, which could be another problem. Facebook, too, operates privately, and reveals only as much information about its business as it has to — at least until it files to go public, which could be later this year.

In all likelihood, many of these investor fears could be settled when Zynga reports its first period as a public company. No word on when that will be yet, but the fourth-quarter report should come as soon as this month, and no later than February.

The company’s stock dipped below $9 a share, and by midday, shares had fallen 29 cents to $8.90, nearing its all-time low of $8.75 a share.

Just last month, the largest social games company successfully sold 100 million shares at $10 apiece to raise $1 billion. On its second day of trading, the company’s stock  sank to what for now is its low before settling at $9.02 a share.

Since then, it has been trading fairly consistently, and there was no obvious explanation for today’s sell-off.

If anything the stock should be pushing higher on the release of its latest games. Typically, more games translates to more revenue for the company, which is focused on selling virtual goods in the free-to-play model.

This morning, Zynga announced its newest mobile game, a spinoff from its ultra-popular Words With Friends franchise. The game, called Scramble With Friends, challenges players to connect letters to spell as many words as possible before the clock runs out.

The game closely follows yesterday’s launch of Hidden Chronicles, which is the company’s first Facebook game in the popular “hidden objects” category, where players are challenged to find a number of items within a scattered and cluttered scene.

Still, Wall Street apparently isn’t impressed.

Based on intraday trading, the company’s market valuation dropped to $6.2 billion, about two-thirds of its IPO valuation of $10 billion.

Zynga isn’t the only stock market newbie trading lower today.

Groupon, the other hot Internet IPO of 2011, also sank. The company’s shares were down 90 cents, or almost 5 percent, to trade at $17.89.

Confidence in the stock was still reeling from two reports released this week. One surveyed merchants to find out how satisfied they were after running a deal. The other reported that revenues in November were weaker than expected across the entire daily deals industry.