Why Zynga, Herbalife, and Best Buy Tumbled Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks finished Thursday on a negative note, with the broadest market measures posting modest declines, while technology stocks helped push the Nasdaq Composite to a slight gain. Amid the causes for concern among investors were poor news reports from several individual companies, with Zynga , Herbalife , and Best Buy all falling by double-digit percentages today.

Zynga dropped 12% after analysts at Sterne Agee argued that the online video game specialist could disappoint investors when it reports its earnings early next month. The company recently irritated fans of its longest-running video game by deciding to shut down the offering, giving investors another reason to fear that Zynga's management isn't in touch with the wishes of its most dedicated users. With investors already expecting losses throughout 2014 on falling revenue, failing to top a very low bar could lead to a further loss of confidence in Zynga's future.

Herbalife fell 10% in sympathy with Nu Skin Enterprises , which itself sank another 27% today and extended its two-day drop to more than $50 per share. With Chinese regulators at the State Administration for Industry and Commerce beginning an investigation of Nu Skin's business practices, investors fear that China will clamp down on Herbalife's similar distribution model, as well. Although there's no sign that Chinese regulators have actually taken any action on Herbalife, some shareholders aren't waiting to see what results from the Nu Skin investigation before coming to their own conclusions about the continued viability of Herbalife's business in China.

Best Buy plunged 29% after the electronics retailer posted falling same-store sales for the holiday season. Comps fell 0.8%, with a very slight 0.1% gain in international same-store sales failing to offset the 0.9% drop in domestic comps. In one bright spot, comparable-online sales rose 23.5%, and Best Buy managed to improve its market share in some key categories. Yet, falling traffic, especially in the mobile area, along with a big drop in margins, led to the loss of confidence in Best Buy's stock.

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The article Why Zynga, Herbalife, and Best Buy Tumbled Today originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has the following options: long January 2015 $50 calls on Herbalife Ltd.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Karen Johnson Furman

Zynga has lied to their customers, ripped them off EVEN after closing the game by taking money from them... You hit the nail on the head, they have NEVER been in touch with the wishes of their most dedicated users EVER! To buy stock in this company would about make you as stupid as they are... If you happen to have it, dump it!!! (Reposted as first never showed)

January 17 2014 at 5:22 PM Report abuse rate up rate down Reply
Shelley Korpan Rober

Zynga more than irritated fans, they've got us downright disgusted, disappointed, angry and feeling betrayed (evidence of this can be found on Twitter, several news articles, Facebook, Big Viking Games and other such places). They lied to us saying "Yoville is here to stay", and although the majority of complaints at this point are mostly about the closure of YoVille for which I too am taking part in all I can do to prevent this. I just wanted to point out that the same kind of courtesy (facetious) is being dealt out in other Zynga games as well (we are being kicked to the curb). Not only am I a staunch YoVillian, I WAS also a dedicated Cafe World and CoasterVille player, but Zynga has neglected those games as well (seems to be a pattern that I'm sure a closure notice will come for them too), and no doubt there are others. My question is this, if Zynga can neglect these games and put them to eventual death (which some have already taken that path - Mafia Wars, Vampire Wars, CityVille, etc.), then how or why would we feel confident that this would/could not happen again to future games? I don't pretend to know the business of wheeling and dealing stocks, but I do know that, if people are dissatisfied with a product (Zynga), this is not the product to put your money and/or faith into. Pretty simple I think!

January 16 2014 at 11:59 PM Report abuse rate up rate down Reply