If you own shares of Zynga (NASDAQ: ZNGA), you probably were hoping the May 29 expiration of the social games maker's lockup period -- which prevents employees from selling shares -- would be the last blow to the stock before a long overdue recovery. Sadly for Zynga shareholders, however, things aren't quite working out that way. Zynga's stock continues its relentlessly grim slide. Shares fell below $5 on Tuesday for the first time ever, to 4.83 -- 13.0% below Monday's closing price of 5.55, 20.1% below the 6.09 closing price on the day the lockup expired in late May, and 69.6% below Zynga's all-time high share price of 15.91 set in early March. Of course, that latter price essentially turned out to be a cruel deception. Zynga was riding a wave of optimism sparked by 1) news of Facebook's pending initial public offering and 2) the announcement that Zynga was creating a platform for gamers on its own website, a move designed to lower the company's dangerous dependence on Facebook, from which it derives more than 96% of its revenue. New platform or no new platform, Zynga remain joined at the hip with Facebook, both in terms of revenue and stock price. Since Facebook (NASDAQ: FB) went public on May 18 -- in an IPO so disastrous it's only current equivalent is Zynga's -- shares are down 29.4% from the first-day closing price through Monday. In that same period, shares of Zynga have dropped 22.5%. If you go by the 8.27 closing price on May 17 -- the day before Facebook shares began trading -- Zynga is down 32.9%. Unless Zynga can demonstrate to Wall Street when it reports Q2 earnings in late July some independence from Facebook in terms of revenue, shareholders can look forward to many more months of single-digit stock prices. But it's not reasonable to expect Zynga's new website platform to move the revenue needle enough away from Facebook in time for Q2 earnings to restore whatever faith investors had in the maker of CityVille, FarmVille and Mafia Wars. In the end, Zynga shareholders would have been better off playing those time-wasting games than trying to play the market.
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