DESIGN DISTRICT, SAN FRANCISCO — After a long spate of difficulties with its product strategy and business model, the gaming company Zynga, once a Silicon Valley powerhouse, is now worth less than the office building in which it resides.
Zynga bought its current headquarters, a massive 668,000 square foot, seven-story building at 8th and Townsend streets, for $228 million in 2012. After falling on tough times, Zynga put its headquarters up for sale in February of this year, but the building’s value has been undisclosed until now.
Multiple sources close to the matter have revealed that Zynga’s headquarters is now assessed at around $540 million. As of close of market today, the company’s market value was around $2 billion. However, due to its reserves of approximately $1.5 billion of cash on hand, analysts estimate that Zynga is actually worth around $500 million. In other words, Zynga’s headquarters is now significantly more valuable than Zynga the company.
Zynga rose to prominence with Facebook-linked games like Farmville and Words With Friends, but has struggled to replicate the successes of its earlier products. At the time of its 2011 IPO, Zynga’s shares were valued at $10 and the company boasted a workforce of 3,000 people. Now, their stock trades at $2 and rounds of layoffs have downsized their team to 1,700 employees.
Employees at neighboring tech companies can reportedly judge when layoffs are happening by the long lines of people walking out of the Zynga office with boxes of their belongings and by the unusually large number of people at local bars at 2 PM on a weekday.
One industry analyst told Halting Problem, “I’m not sure what’s more ridiculous now: the outrageous prices of the SF housing market or the idea that anyone still enjoys playing Farmville.”
Representatives at Zynga did not respond to Halting Problem’s requests for comments. However, rumors suggest that company executives, who previously tried to copy other people’s games, are having difficulty finding a sustainable business model in Silicon Valley to copy.