> It's a good headline, buut won't the market correct this naturally to account for the fact it's worth "less" than it's assets or is Zynga going to just keep dropping?

Not unless equities investors decide to act rationally, and there's little evidence for that. Stocks falling below the true value of company assets is such a common occurrence that cagier, usually bigger, players will locate and "greenmail" such a company into buying their own stock with company assets to correct the difference between market valuation and basic value.

http://en.wikipedia.org/wiki/Greenmail

So I guess the answer to your question is "yes" but exactly how this happens is sometimes rather complicated.

Obviously if a company can be located whose physical plant and inventory value is higher than its stock valuation, such a company is vulnerable to a takeover by anyone able to detect this peculiar state of affairs and act on it.

Actually, it's quite a rational approach. As an equity investor, you have to articulate a certain expectation for cashflow. If you believed that Zynga would give up the game and liquidate itself now, you might price it to net assets. However, the expectation is that although they may have $X in net assets available, they're going to keep bleeding that out until they have less than $X. Basically, you've got a CEO with a dollar, and you don't even believe s/he is going to earn enough to make back that dollar after all the money s/he wastes.