Zynga's spending is indicative of a few trends in social gaming. First, the company has discovered it's very hard to earn new players. Many of Zynga's games are similar, and without really experimenting, it's going to be hard to generate uniques. Second, Zynga's earnings are based on "whales": A small percentage of players who spend big. You need to find a lot of unique free-to-play players to land a few whales, and Bhatia doesn't see Zynga doing that lately.
So what's the solution? "Zynga will have to find their next FarmVille," says Bhatia. Until the company finds another phenomenally popular hit and the surge in new players that comes along with it (which is incredibly tough to do), Bhatia expects to see even more problems with Zynga and its stock.