Zynga Inc. (Nasdaq: ZNGA) will report earnings for the first time today (Tuesday) since going public, and investors want to see if Zynga has a future plan for profits that isn't tightly pinned to Facebook Inc.
Zynga is the largest social gamer in the world, behind FarmVille, CityVille, Mafia Wars, and Words with Friends. It has 230 million active monthly users, but growth slowed in the end of 2011 because of few new hit games released.
Zynga debuted its $1 billion IPO in December. It listed its relationship with Facebook under risks associated with the business in its IPO filing.
Wall Street expects the Zynga earnings report to show profit of 3 cents per share on revenue of $301.1 million for the fiscal fourth quarter. That would be a 54% revenue gain from the last quarter of 2010.
Zynga is profitable, unlike some of its social media-related counterparts, but the question is, can it build a company that's not so reliant on Facebook?
To continue reading, please click here...
Zynga Inc. (Nasdaq: ZNGA)
Article Index
Today's Earnings Preview: Can Zynga Inc. (Nasdaq: ZNGA) Loosen its Facebook Ties?
To continue reading, please click here...
Zynga IPO Flop Proves Social Media Listings Are Still Suspect
A strong debut by Zynga Inc. (Nasdaq: ZNGA) today (Friday) could have redeemed the tarnished reputation of social media companies. Instead, the online game-maker became the latest addition to salvage yard full of over-hyped social media companies that didn't live up to the promise of their initial listings.
After debuting at $10 a share, Zynga stock tumbled 7.75% to $9.25 in just four short hours of trading.
Money Morning Capital Waves Strategist Shah Gilani wasn't surprised.
"I don't particularly like the position the company's in. It's got a lot of competition at its heels and I'm not sure about the valuation of the stock," he said on Fox Business' "Varney & Co." program this morning. "I think there's a lot of hype in the social media space."
Indeed, Zynga's failure follows in the footsteps of Pandora Media Inc. (NYSE: P), LinkedIn Corp. (NYSE: LNKD), and Groupon Inc. (Nasdaq: GRPN).
But that's not all.
Here's what Zynga's initial public offering (IPO) means to investors going forward:
- Zynga will set the tone for 2012: The tech IPO market this year has fizzled, and was in desperate need of a spark that Zynga didn't provide. This is an undesirable lead-in for Facebook Inc., which is expected to debut in the second quarter of 2012. It might also hurt Yelp! Inc., the business review site that filed for an IPO on Nov. 17.
- It could influence future tech-IPO overpricing: Zynga drastically scaled back its initial pricing by more than 50% since July, when it was valued at $20 billion. Tech IPOs priced earlier in the year received a barrage of criticism for overpricing, but there's been much less of the same talk surrounding Zynga's range of $8.50 to $10. If it fails to close above $10 a share today, future tech IPOs may rethink their strategies.
To continue reading, please click here...
Why Zynga Stock is Sinking
Loading the player ...
Why Zynga Stock is Sinking
Zynga Inc. started trading today (Friday) at $10 a share and after a few hours was already seeing red. Money Morning Capital Waves Strategist Shah Gilani joined Fox Business' "Varney & Co." Friday morning and detailed why Zynga stock should be avoided.Watch and discuss
A Tech IPO Bellwether: What to Watch as Zynga Stock Starts Trading
Social-gaming giant Zynga Inc. starts trading today (Friday), capping off a rocky year for tech initial public offerings (IPOs). A strong performance from Zynga stock today and into the New Year would shed the "bubble" reputation surrounding the sector in 2011.
Here's what you need to know about this latest tech IPO:
Here's what you need to know about this latest tech IPO:
- Zynga will set the tone for 2012: The tech IPO market this year has fizzled, and could use a spark. Zynga could provide one. Scott Sweet of IPO Boutique told clients in an e-mail Wednesday morning there was more investor interest in Zynga than available shares. A strong debut for Zynga stock would be a good lead-in for Facebook Inc., which is expected to debut in the second quarter of 2012. It might also help Yelp! Inc., the business review site that filed for an IPO on Nov. 17. Finally, it might even subdue talk that tech is doomed for a second dot-com bubble.
- It's Facebook-dependent: Zynga's growth is tied directly to Facebook. It generates a whopping 95% of its revenue through the social networking site, and that's not going to change anytime soon. While the relationship is an incredible revenue boost for Zynga, it's also a huge investor concern. If the business relationship soured, Zynga's revenue stream would dry up immediately.
Still, this dependence could give Zynga stock a boost, in that investors eager to profit from Facebook's growth can do so with the social gamer.
Zynga's contract with Facebook isn't up for review until 2015, giving Zynga three years to develop new revenue sources and decrease its Facebook dependence - if it proves detrimental. The company plans to push its product toward high-growth Asian markets. - It could mark the end of drastic tech-IPO overpricing: Zynga has drastically scaled back its initial pricing by more than 50% since July, when it was valued at $20 billion. Tech IPOs priced earlier in the year received a barrage of criticism for overpricing, but there's been much less of the same talk surrounding Zynga's adjusted range.
BTIG analyst Richard Greenfield recommended participating in the IPO in the $8.50 to $10 range, and said even at the higher end he thinks it could yield up to a 50% return for investors within a year. Greenfield said the lower IPO price range favors investors and expects the company's revenue to grow by about 45% over the next two years.
To continue reading, please click here...