Zynga is dealing with some troubling data, starting with the fact that their top title CityVille has diminished from 72 million monthly active users from a high of 100 million. An SEC filing shows year-over-year profits are down 95 percent at $1.3 million versus $27.2 million for the previous period while the number of daily active users across all Zynga titles dropped 4 percent, from 62 million to 59 million.

Zynga’s accounting measure in “bookings” (which measures all revenue prior to adjustments like Facebook’s cut) fell 4 percent from $287 million in the Spring 2011 quarter to $275 million in the Summer 2011 quarter. While Empires & Allies, launched in during that Summer 2011 period and is viewed as a positive step for the company, IPO analyst Francis Gaskins notes that overall metrics were down.

“Whenever a company boldly creates its own accounting conventions, investors question whether it’s just a restatement to pull the wool over investors eyes. Groupon is the prime current example, although in the case of Groupon, the SEC pushed back and made it conform to general accounting principals,” wrote Gaskins.

“Sequential quarterly metrics comparisons for 2011’s June quarter versus the March quarter are not favorable,” he said. “As for Zynga management and its consultants, imagine showing quarterly income of only $1.4 million and a $14 billion valuation at the same time At a $14 billion valuation, Zynga is an obvious short. We have always had questions about Zynga and its valuation.”

Source: Seeking Alpha