The stock market hasn’t started off well for the year, and the Nasdaq Composite (-IXIC) has taken the majority of the beating thus far. In the first week of trading in the new year, the index dropped 4%, and as of 8 a.m. ET on Monday, futures on the Nasdaq were down another 153 points to

The Nasdaq’s difficulties worsened on Monday morning when Lululemon Athletica’s shares dropped after the yoga apparel company delivered disappointing news related to preliminary results from the holiday season.

However, as the company eyed a merger in the video-game sector that might bestow a large premium on investors, Zynga got a nice boost higher. Let’s start with Zynga’s huge news and then go through what had Lululemon investors down this week.

Zynga Levels Up:

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In premarket trading on Monday, shares of Zynga rose more than 50 percent. The mobile game specialist and would-be acquirer announced their plans to join forces to become a larger player in video gaming.

Take-Two Interactive Software (NASDAQ:TTWO) will acquire all of Zynga’s outstanding shares for $12.7 billion in a deal that values the company at $12.7 billion. Investors will get $3.50 cash and $6.36 worth of Take-Two stock for each Zynga share they own

Unlike most stock-based compensation agreements, which specify a set amount of money per share at the time of the agreement, Zynga agreed to a system that will examine Take-Two’s stock price immediately before the acquisition is completed. That particular clause will safeguard Zynga shareholders from downside moves in Take-Two’s stock, but it might also

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Take-Two and Zynga gave numerous reasons for the move. The combination will create an industry-leading portfolio of console and mobile games, allowing for greater scale at a crucial moment. Take-Two projects to save $100 million each year by uniting forces, and sharing assets like developers and advertisement platforms should pay off as well.

Take-Two’s stock fell nearly 9%, suggesting that investors believe the firm may have overpaid for Zynga. With mobile gaming’s popularity, it’s easy to see why the two firms decided on a merger.

Lululemon Feels The Burn:

Lululemon Athletica’s stock dropped nearly 6% in premarket trading. Lululemon Athletica’s holiday performance wasn’t as good as many had expected, adding to the downward momentum of a stock that has lost 25% of its value in less than two months.

Lululemon’s fourth-quarter results fell short of Wall Street expectations. The firm forecasted that revenue would fall within the low end of its previous range of guidance between $2.125 billion and $2.165 billion, disappointing investors. Furthermore, earnings are likely to be unimpressive, with indications pointing to a range of $3

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The fundamentals of Lululemon have generally been optimistic for it, but that hasn’t prevented a substantial share price drop lately. Given Lululemon’s track record of growth, an atmosphere in which growth stocks are underperforming isn’t likely to be advantageous to a firm unable to exceed investor expectations.

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