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Zynga Beats IPO Lawsuit

A small win for the social gaming company.


The U.S. District Court of San Francisco dismissed a lawsuit against Zynga, in which investors accused the social gaming company for misleading them and inflating the value of its stock price ahead of and after its 2011 initial public offering, according to legal documents filed on Tuesday.

Among the claims against Zynga — and a host of its executives, including founder Mark Pincus, board member Reid Hoffman and others — some shareholders alleged that Zynga had hidden details around how Facebook platform changes and a drop in its user numbers and revenue would ultimately negatively affect Zynga share performance.

“Despite the length of the complaint,” which was more than 110 pages long, “Plaintiffs fail to include the relevant, basic factual details in support of their claims,” said Jeffrey White, judge for the U.S. District Court for the Northern District of California, in his six-page ruling filed on February 25.

Update 9:19 pm: “Today the court granted our motion to dismiss the plaintiff’s class action complaint in the securities litigation,” Zynga said in a statement. “We are pleased with today’s order and continue to believe in the merits of our defense. The focus for Zynga is on our forward-looking business and delivering on our 2014 goals of growing and sustaining our proven franchises and creating new hits.”

The ruling is a small win for the social gaming giant, which has suffered plummeting stock prices over the past two years as users have transitioned en masse from desktop computing to mobile devices.

Zynga last year elected a new CEO, former Microsoft exec Don Mattrick, to lead the company, replacing founder and long-time CEO Mark Pincus. Last month, Mattrick and company announced it would acquire Natural Motion, a buzzy app-making outfit, for about half a billion dollars.

Read the ruling in full below.

Zynga Ipo Case Ruling

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