It’s earnings season, which usually means one thing: companies try to hide things in the mass of 8-Ks that come out at this time of year. Often, this means burying something in the same 8-K that announces the earnings. But sometimes, companies employ a two-for-the-price of one technique, filing one 8-K that gets all the attention, while another 8-K attracts virtually none.
Take Zynga (ZNGA), for example, which, as you may have heard, reported 2nd quarter earnings that hit the market like a brick. The stock fell nearly 40% yesterday and is down about 70% from its IPO last December.
Given Zynga’s high profile, not to mention its ties to Facebook (FB), which reported its own disappointing earnings yesterday, there’s been quite a few pixels devoted to the subject, including this piece on Forbes.com that sensationalizes the fact that Zynga CEO Mark Pincus is no longer a billionaire. We’ve also counted 6 law firms that are “investigating” the company.
Given this, it’s not so surprising that nobody seems to have picked up on the other 8-K that Zynga filed on Tuesday. According to the SEC time-stamp, it was filed only two minutes after the earnings were released. Short and sweet, the filing notes that Pincus now controls just over 50% “of the total voting power” as of July 24. It’s not entirely clear when, but apparently investors in Zynga Class B stock sold their shares to Pincus. Since Class B shares are entitled to 7 votes (as opposed to 1 vote for Class A shares), that pushed Pincus over the 50% hurdle.
Given the earnings news, Pincus can either view this as very good timing (being a controlled company certainly has its perks, like not really having to listen to shareholders), or very bad, since more of a sinking ship isn’t always a good thing.
Whatever his thinking, we’re quite sure that the timing of that second 8-K wasn’t a mere coincidence.
It’s earnings season and it’s a Friday, which means that there should be some good stuff in tonight’s Friday night dump. At footnotedPro, our subscription service exclusively for financial professionals, we identify early warning signs and hidden red flags well in advance of the market. For more information, or to inquire about a trial subscription, please email us.