Analysts Pessimistic About Zynga's Growth Potential Ahead of IPO

Perhaps the most well-known social gaming company is getting ready to launch its initial public offering (IPO) later this week and analysts are already tamping down expectations.     Forbes reports that predictions of the Farmville parent company will ”slow to 20% and 17% in 2012 and 2013, respectively, versus growth of 156% in 2010 and (estimated) 37% in 2011.”  That’s a pretty steep drop off, but makes sense when you figure that nearly all of its games are the same just with different themes (i.e., farms, cities, castles).  For all of its meteoric growth, especially once it partnered with Facebook, perhaps its most notable liability is that same Facebook partnership.  Facebook remains the dominant force in social media, but growing pressure over its privacy and security problems and competition from Google and Twitter might slow its growth as well.  Zynga’s decision to use Facebook Credits as its main source of income also limits its independence and ability to adapt to changing market forces (I could get into analogies about developing countries pegging their currency to the dollar, but that might get a little too wonky, but I can always elaborate in the comments if you’re really interested).  For now, we’ll watch the IPO and marvel at another Internet startup raking in millions, but I, for one, will be keeping my real dollars in my real wallet.

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