Media Money with Julia Boorstin

Earnings Preview: Zynga Under Pressure

Source: Zynga | Twitter

When Zynga reports earnings after the bell on Tuesday, it faces harsh scrutiny from Wall Street.

While the stock is down over 80 percent over the past year, it has gained over 18 percent in the past three months. Investors are wondering if the company can turn itself around, or if it's doomed to continue to decline as people spend more time on mobile devices, where they're less likely to play Zynga games than they are on the desktop.

The company's earnings per share are expected to swing from a 5 cent gain a year ago to a 3 cent-per-share loss in the four quarter. Revenue is expected to decline 31 percent to $212 million.

(Read More: Zynga a 'Risky Bet': Analyst.)

During CEO Mark Pincus' earnings call, investors will be listening for any information about Zynga's progress in the real-money gaming (i.e. gambling) space. It's a rare bright spot, and when the company has announced progress in this arena the stock has generally jumped.

Zynga has done a reorganization and lost a number of c-suite executives, so we'll see if Pincus provides any insight into the success of the new corporate structure, or the impact of its layoffs. And with Facebook changing its rules to give Zynga less of an advantage, we'll see how Pincus promotes Zynga's platform as well as more mobile games as a source of growth.

(Read More: Got Game? Videogame Industry Turns to Mobile.)

The fundamental challenge Zynga faces is the same one Facebook has been tackling. People have been spending more time on mobile devices and less time on the desktop. And that new behavior means they're spending less time playing social games, like Zynga's, and more time playing mobile apps, like "Angry Birds" or "Temple Run."

The problem for Zynga is that there are fewer barriers to entry to create a mobile app, and there are fewer reasons for players to be loyal. We'll see how Zynga continues its strategy of shifting its focus to mobile, and if it has any progress on that great white whale of online gaming—gambling.

UPDATE: Tuesday morning Bank of America Merrill Lynch analyst Justin post boosted his price target for the stock from $2.70 to $3.40. He also raised his rating on the company to "Buy" from "underperform," skipping an entire rating level. The source of his optimism on the company: its asset value and its mobile business. This upgrade sent Zynga shares soaring—now up more than 6 percent. (Click here to track Zynga stock.)

(Read More: Why Break From Facebook Is Good for Zynga: Pro.)

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin