Zynga’s Future Hinges on Its Ability to Adopt New Methods

Is Zynga (NASDAQ: ZNGA) Finally on the Mend?

Is Zynga (NASDAQ: ZNGA) Finally on the Mend?

Is Zynga (NASDAQ: ZNGA) Finally on the Mend?

Social media is like a virus; it’s fast growing, furious and impossible to ignore. And now, like a virus, social media company Zynga (NASDAQ: ZNGA) may finally be contagious. No one can dispute that it’s been a rough road for the company since its IPO at the end of 2011. Then, it was one of the most highly touted new kids on the block. The San Francisco-based company had managed to raise an astounding $1 billion dollars in the biggest Internet company debut on Wall Street since Google Inc. (NASDAQ: GOOG). Zynga priced its initial public offering at $10 per share and the world looked rosy for the creator of such games as Words With Friends and Farmville. That was in December of 2011. By January things had begun to go horribly wrong. In fact, shares which had traded of a high of $15.91 began a slow, inexorable slide until finally bottoming out at $2.09.  As investors clutched their chests in dismay and the company hung its head in shame, the finger pointing began in earnest. The IPO was over-priced. Zynga should never have gone public. It was all Facebook’s (NASDAQ: FB) fault. The laundry list went on and on. But now the company appears to be taking advantage of a potential niche.

Shares got a substantial boost (almost 11 percent) last Friday as the specter of an online gaming bill was revived in New Jersey. According to Reuters, New Jersey Governor Chris Christie initially vetoed the Internet gaming bill, but has now asked for the bill, with revisions, to cross his desk once more. As long as the bill meets the revision requirements, the governor has indicated that he will sign it. This will open a market for real-money Internet gaming that could net upwards of $1 billion. So far, Zynga’s real-money gaming has been largely confined to the United Kingdom where laws are more lax. The company has applied for a gaming license in Nevada and now, depending upon Christie, the company will undoubtedly target New Jersey.

Investors are hoping that Zynga will get its foot in the door of the online casino market in the U.S., which has the potential to garner huge revenues and nice returns for shareholders. Zynga is determined not to disappoint them. As of today Zynga has a market cap of $2.69 billion and shares are trading at $3.42.

 Here’s hoping that things continue to improve for the struggling company.

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8 Responses

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  1. Meiko Acebo
    meikoacebo
    Feb 14, 2013 - 10:22 AM

    Market is already pricing the company’s plan to enter the online gaming. but i would like to see shares to decline before accumulating the stock.

    Reply
  2. entresean
    Feb 15, 2013 - 04:34 PM

    Good news for Zynga. I have nothing against this company, but I would do some thorough homework if I were to invest in it. This sector is quite tricky.

    Reply
  3. Lillie
    Feb 15, 2013 - 05:07 PM

    The Gaming Industry is gaining traction right. Interesting to see how this plays out for Zynga.

    Reply
  4. sarah
    Feb 15, 2013 - 11:15 PM

    It is really a good news, very helpful for the people like me…

    Reply
  5. Tyokunbo Abiola
    Tyokunbo
    Feb 20, 2013 - 01:53 PM

    Even though it operates in a tricky industry, I like Zynga. It shows resilience. With social media still a virus, the stock should do well in the long-term.

    Reply
  6. Matt Rego
    mrego123
    Feb 20, 2013 - 07:50 PM

    It appears like they are. After the freefall and the revolving executive door, it appears the company is starting to get on stable footing again. Earnings estimates for this year and next year look great, low debt and nice cash reserves will help the company stay afloat for the time being.

    Reply
    • entresean
      Mar 01, 2013 - 07:11 PM

      I like the part where you pointed out low debt and healthy cash reserves. Investors hardly consider these metrics.

      Reply
  7. Khangelani Hlongwane
    konraad
    Feb 24, 2013 - 09:22 AM

    this company has a great future. online gaming will only just get bigger in the coming years and as online gambling continues to grow, revenues will increase

    Reply

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