Is Zynga Inc. (ZNGA) Game any More?
Zynga Inc. (NASDAQ: ZNGA) is a major social-game service provider based in the United States. It is the developer of social gaming phenomena such as FarmVille, CityVille, Mafia Wars, CastleVille, and Zynga Poker. These games can be played on the company website, social media platforms such as Facebook, and mobile platforms.
These games are played by more than 60 million daily active users (DAUs) all over the world, according to AppData in December 2012. On the other hand, according data published by comScore, players spent more time on Zynga games in December of 2012 than they altogether did on the games developed by the five other top mobile game developers. So what could have happened in the following months to cast a shadow of doubt over Zynga’s stock fortunes?
All That Glitters is NOT Gold: The Onslaught of Free-Loaders
Zynga’s games may be a rage all over the world but the player base does not accurately reflect the revenue prospects of the company. A majority of the players play the free versions of the games and the small number of players who subscribe to the gaming services of Zynga do not enhance the stock potential of the company.
A Management Shake-Up that Shook Stock Fortunes
Zynga Inc. (NASDAQ: ZNGA) has witnessed massive price fluctuations in 2013. There was a whopping 36 percent surge in short interest between July 15th and July 31st. During this time, 41.53 million shares, constituting eight percent of Zynga’s float, were sold. This is till now, the most shares ever sold short in the course of a year. But since then, shares have plummeted.
Trade analysts attribute the slide to the management shake-up in July that robbed investor confidence. In fact, the move caused such a flutter that Zynga stocks fell below the 10-day moving average. And then to compound matters, the equity faced a stumbling block at the 200-day moving average. So, whatever revival plans Zynga may have envisioned could not take off.
A Costly Gamble?
Zynga Inc. (NASDAQ: ZNGA) had announced with much fanfare, its intention to venture into the real-money online gambling scene in the United States. The announcement had been greeted with cheers by the investment community because of the perceived revenue-earning potential of this gaming form. But Zynga has since then abandoned the pursuit. According to industry pundits, this too is a potent cause behind the slide in their shares.
The Silver Lining in the Cloud
The gloom over Zynga may seem all-pervading but there is a sliver of hope. The hopes pin on Don Mattrick who has recently taken over as the CEO of the company. He has already made public his revival plan and announced his intentions to tap the burgeoning smartphone and tablet markets. Mattrick is a highly-esteemed industry professional and has proved his mettle in the entertainment and gaming industry. But, he still needs to prove himself on the Zynga board.
So as of now, Znyga’s stocks do not sound to be lucrative investment options. They can at best be regarded as speculative options that should be dabbled in only after exercising utmost caution. The clock is ticking for Don Mattrick and whatever he plans for the company will affect the fortunes of Zynga Inc. (NASDAQ: ZNGA) stock’s price.