The Internet social gaming community has a love-hate relationship with Zynga in that they produced one of the most popular social gaming series ever to hit the web—that in the Farmville franchise. In fact, they were so instrumental in bringing critical mass to casual gaming on platforms such as Facebook. Yesterday, Zynga’s shares fell with a suddenness falling as much as 13 percent—triggering “a short-sale circuit breaker.”

Dean Takahashi at VentureBeat mentions that Zynga’s shares have risen as high as $15.91; but they’ve seen a bit of a fall after Facebook’s recent IPO:

In a research note, Cowen analyst Doug Creutz wrote that Zynga’s daily active users declined by 8.2 percent last month, the second month in a row for such a drop. Zynga’s stock closed today at $4.98 a share, down 10.2 percent from the previous day.

“Nearly all of the company’s major titles declined significantly,” he said.

Last year Zynga took a long time to bring their IPO to the market, hemming and hawing their way into public release; when they finally hit the market their valuation seemed shaky, but they certainly seem to have had a tried-and-proven revenue stream. Still, even after the IPO, there’s been questions about how they would keep that revenue model in the face of ever-increasing competition in the market.

Now, the social gaming giant appears to be suffering a loss of players.

A report by AppData published in The Telegraph shows that the long-time –ville series seem to be losing the light in players’ eyes,

But six months later an exodus has hit both virtual worlds, with June’s numbers showing a drop of almost six million daily players for Cityville and three million for Farmville.

While other popular Facebook games such as Words With Friends and Texas HoldEm Poker have shown slow but steady growth in 2012, it seems that the widely-reproduced “-ville” formula, based on players making improvements to a virtual town or home and inviting their friends to help via the social network, has lost its charm.

According to reports, daily activity on Zynga’s social games declined by 8.2% in May, followed only by a 12% decline in April.

Much of this might be in part due to the rising interest in mobile gaming when it comes to social and casual gaming in general—a strong and growing segment.

Zynga is aware of this, of course, pushing into venues such as Xbox and further into mobile gaming themselves.

The decline of Zynga’s Facebook population may not be connected to an overall decline in their business model; but it’s not exactly what investors want to see from the rising-star of the social gaming revolution. We can probably expect to see the gaming company fight back by releasing information on development of games that expand their social portfolio and we will probably see their stock continue to decline until it normalizes with market expectations.