NEW YORK (CNNMoney) -- Zynga shares tumbled nearly 40% Thursday, a day after the company reported earnings that missed analysts' expectations.
The social gaming firm reported sales of $332 million in the second quarter, lower than the $344 million analysts had predicted. Known for games like FarmVille and Words With Friends, Zynga (ZNGA) said profits, excluding one-time charges, were one cent a share, falling short of the six cents analysts expected.
Zynga also lowered its outlook for the rest of the year.
Zynga said users on Facebook (FB) -- one of the gaming company's platforms -- aren't spending as much on games anymore, leading to lower online revenues from the previous quarter.
Shares ended the day down 37%, at $3.18.
Facebook reported a 32% jump in revenue and earnings-per-share of 12 cents, roughly in line with forecasts. But the stock fell 5% in after-hours trading as investors had hoped for more. Shares of Facebook were already lower headin into the earnings news, with the stock closing the trading day down 8.5%.
In March, Zynga scooped up OMGPop for a rumored $200 million. OMGPop, a six-year-old company, instantly gained a following for its Pictionary-like game Draw Something earlier this year.
It seems that Draw Something has lost traction, as the company cited it as one of several reasons for its lowered outlook, including, "delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something."
So the question remains: Is it game over for Zynga?
BTIG analyst Rich Greenfield published a note Thursday, titled, "Downgrading Zynga to Neutral: We Are Sorry and Embarrassed by Our Mistake."
In it, he wrote, "With management clearly unprepared for the rapid mobile transition that the Internet world is currently experiencing, our confidence in Zynga management diminished, our inability to model Zynga's earnings, and ... we simply cannot justify a 'buy' rating on Zynga."
But Needham & Co. analyst Sean McGowan thnks Zynga has a sustainable business, as "the company still has a lot of revenue," he said.
"Gaming is not a fad. Digital gaming has been around 30-plus years," McGowan said. "What's happened to them is that they were almost a victim of their own success. They've gotten so big there was almost nowhere to go but down."
-- CNNMoney's Laurie Segall contributed to this report. 
