My wife plays Farmville, and the other day she picked up a $10 gift card to buy some sort of virtual item in the game. I haven't really paid any attention to Zynga previously, but I decided to take a look after she paid some real money for a virtual item.
It appears to me that the stock is rather out of favor right now, as is Facebook. It seems to have over a billion dollars in cash, and about 100 million in debt. If I'm reading things right, it looks like Zynga could wipe out the debt completely by applying proceeds from about a year and a half of operations, or by using about 10% of their cash hoard.
It also looks like the stock is only selling for about 25% more than its "book value". Considering how low the stock price is, it almost seems to me that the average person thinks that this company is not expected to generate much of any income over the next few years.
Is this a correct assessment? I'm also not understanding why the earnings took such a nosedive recently. Obviously, SOME people are spending money - and my wife is one of them. There are people out there spending money for virtual items, and it would seem to me that over time this could be profitable.
At first glance anyway, Zynga looks sort of like it might be worth adding to a list of potential long term investments. I wouldn't put more than about 2% or 3% into it, but first I'd like to hear from you guys, who obviously have spent much more time looking over the company.
If you're just looking to pump the stock up or down, please don't participate here. However, if you have a longer term viewpoint, and you have actually looked at the financials for the company, or are familiar with what they do, and who uses the game software, I would very much be interested in hearing your point of view:
In your opinion, what are the major challenges Zynga needs to overcome in order to stay profitable? What are the most likely pitfalls that could keep that from happening?
A game developer who has sold games to FB told me that Zynga was a bad investment, even at rock bottom.
They are losing market share as other gaming companies are moving in and saturating the industry. Not to mention the independents who are willing to fork over games on a much better deal.
Zanga only got to it's lofty position because it was the first, but they are basically a one trick pony.
Still, if it dropped to $2, it would be hard to resist pulling the trigger.
A better investment for your wife would be a virtual vibrator rather than the bull dog. This company will run through cash at warp speed. Any reduction of staff would be a major warning sign.
I think Pincus sold his common stocks worth of $200million to buy Class B stocks from his officers. However, I can not verify this because no where has publish this. The media somehow call Pincus unethical, because he got his officers to give him back Class B stocks. Now, everyone, use your butt and think about it. If officers were coerced to give stocks back to PIncus, won't any lawyers get involved? It is obvious that PIncus bought the Class B stock from them, so everyone is happy. Pincus got his 50+% and control of the company and officers got their $$$ at a premium price. So I think Pincus sold his stocks to pay his officers for their Class B stocks. As right now, I think Zynga has great future and when everyone hates it, it is a great time to get in.
Its pretty much a $700mil company earning over $1bil in revenues operating near break even..... Well worth a bet at these levels based on the intrinsic value.
The negative is every shareholder, everyone of them is underwater.... so you've got a broken stock and those are almost impossible to put back together again.
I believe when Pincus and friends stop issuing stock to themselves at our expense this company will skyrocket to Mars!
Stock-based expense 95,456,000
excellent post- but a waste f time!
Pincus (now known as Pinus) is facing may law suits and a a likely SEC investigation. As a bag holder @ $11 unfortunately the in NO long term view for this sad company.
He is reviled in the industry and a despicable character in the eyes of employees , some of whom I know.
Try investing in EA , I guess , if your wife likes EA games.