Zynga down on Piper Jaffray downgrade

NEW YORK -- Shares of Zynga tumbled nearly 5 percent Wednesday after Piper Jaffray predicted that a decline in revenue for social gaming companies would accelerate next year, with fewer teens showing interest.

THE SPARK: Analyst Michael Olson downgraded the stock from "Overweight" to "Neutral. Pipper Jaffray surveyed more than 7,700 teens, and found that their view of social gaming is more negative than before. Two years ago, 56 percent of teens said they would reduce their social game time on sites like Facebook, a figure that has risen to 90 percent since, Olson wrote.

Olson noted that 60 percent of Zynga's revenue comes from mature, declining games like FarmVille, Zynga Poker and CityVille, and he is now forecasting an 8 percent decline in revenue next year, compared with the 2 percent decline expected by most analysts.

THE ANALYSIS: The online gaming company is trying to transition from relying on Facebook games to cellphone games, but investors are pessimistic. On Friday, the shares hit an all-time low of $2.21, after Zynga forecast a third-quarter loss. It's also taking a charge related to its March acquisition of mobile game company OMGPop.

SHARE ACTION: Stock in Zynga Inc. fell 12 cents to $2.32 in midday trading. The San Francisco company went public last December at $10 per share.