Ok, lets get serious here. $10B valuation / $250M revenue/year = 40x multiplier.

Do people really think that Zynga is going to continue to deliver for years and years to come?

A 40x multiplier for a company growing as fast as Zynga is is totally reasonable. They aren't a Fortune 500 blue chip whose growth is primarily constrained by the market and macroeconomic factors: there are still more people who have not experienced the joy of virtual cabbage farming out there.

I wouldn't sell my index funds and buy Zynga, but if Wall Street is investing in them, I think that probably isn't in the top half of dumbest things Wall Street will do this year.

I'm not sure there actually are that many people that haven't discovered the joys of virtual cabbage farming that might be persuaded to do so. They claim 320 million people have tried a game, which is a staggeringly large proportion of free internet users. The amount of worldwide free time spent on Zynga is so ridiculously huge I genuinely can't see the potential for upward trends to continue (other than cornering the Chinese social game market, which will be tough). Unlike Facebook, I don't think it's fair to say they're only scratching the surface of their revenue-generating potential either.

I would say no, but never underestimate the extent of human stupidity. All those bizarre Farmville-branded snacks and drinks at 7-11? Somebody's buying that crap.

More like 10B/1B. That's a 10x val.