The agonizing death spiral of the bull dog is an ongoing saga. Think of all the fake bounces in the last three months, much of it price manipulation, on the road down. It increasingly appears that ZNGA's good faith value is unsubstantial. No wonder, as a group of high school tech nerds could quickly create competition from a garage and a bank of computers. I suspect that there will be a dramatic rise in the burn rate of ZNGA's much touted cash assets. A movement toward $2- is to be expected, and that will be the next key psychological price level. Online gambling, ZNGA's only hope of redemption, is but a pipe dream. We have 50 states, each with its own myriad of bureaucracy, tax rules, slimy politicians, and their own in house lotteries quite adverse to new forms of competition. Do you think California would for a moment allow online gambling to compete with the state lottery, a huge cash cow raping the underclass with just horrid odds? The short answer is no.
You are being short sited on the gambling aspect. It's not US gambling they are working with... In just about every other country outside the USA online gambling is legal. Europe / Asia is the market, not the USA. Heck... even Canada has online gaming and has had it for many, many years.
I believe online gambling already exists in Great Britain, and I'm sure there are other countries, so there would be strong competitive forces at work. What would make ZNGA special among the crowd? The only edge would be better odds, and hence diminished returns. The regulatory complexities still remain huge, as each nation would demand its cut of the winnings. You would need ten floors of accountants, lawyers versed in the different languages, and lobbyists with cash in hand. How would any nation enforce bookkeeping honesty on a company like ZNGA, as the whole thing is easily open to corruption?
I take the opposite view. The fact that ZNGA would speculate in the price of its very own sad stock is an act of desperation, an attempt to put a floor beneath beneath the selling. It indicates that creativity is at a low point. Of course, they could make an acquisition like OMGPop, and then write off more than 50% of the purchase price months later. The bottom line is that this is not shareholder money put to good use. The company would be better off purchasing Pacific Heights mansions, maybe a whole block's worth, and renting out the rooms to employees. Now that's an investment.