BOTTOM in. Consolidating between 3.20-3.30 for 3 days.
Very classic consolidation in a narrow range. Generally such narrow range consolidations last 3-5 days and we have already been through 3 and may be 3 an 1/2 days. Drop from 3.70 simply because of profit taking but naked short manipulation is also played a role. Shorts have tired hard and have failed to drag it below the consolidation range. I suspect another day or two and the uptrend will begin followed by a major short squeeze which should easily send the shares above the 3.70. ZNGA also have a couple of triggers on its side: 1- EA news after the CLOSE that they have finally given up on their frivolous lawsuit. This alone should bump the shares up quite bit (this alone may call off any further consolidation with uptrend starting at the earnest Tuesday morning).
2- we are getting closer and closer to online gambling news from Nevada, where Zynga is already filed, to New Jersey...
My advice to longs: you are sitting in a very sweet spot and you may be rewarded sooner than you think but even then hang on to your shares. Zynga's future will be absolutely awesome. Just imagine a worldwide casino with no expensive buildings or dealers!!!!!
Generally a stock that breaks out of a base, then comes down on profit taking, consolidates, almost always continues in the direction of the move , which in this case is up. Unless there is some really bad fundamental news I would expect ZNGA to rise after this consolidation and take out the old highs. For a similar pattern check GV, so you know what is to come.
The EA news actually came a few hoursb prior to the close, and is a non-event..The news that Pincus is giving a presentation to Morgan Stanley came after the close, and did push up the stock in after-hours. That is good news in that it appears the Wall Street Investment Banks are renewing their interest in Zinga after last-years disastrous fall. I also agree that the stock is acting as might be expected after a big run, and has held the bottom of this consolidation with aplomb, and appears poised to move higher. When one considers that the selloff was entirely manipulated by short-sellers , and not related to any fundamental news, a quick rebound may occur next week. When one considers that there is apparently a huge short position in the stock, manyfold times larger than when it was last reported in mid-January, the recovery to the 2013 high should be easily attainable.
Thanks and you are correct in that EA news first came out few hours before the close and I think while the market was open it actually hurt ZNGA dropping the shares from around 3.25 to a low of 3.17 before rebounding to 3.20 right before the close. The reason being that initially the reports were talking about a "settlement" between EA and ZNGA and hence it wasn't clear if ZNGA was forced to pay EA a sum. I think it wasn't until AFTER the market's close that became more clear that all parties simple agreed to drop all lawsuits with prejudice and nobody had to pay the other side (both parties agreed to pay their own legal fees). As a matter of fact this issue is not completely known yet but it seems there were no payments. If so I think this is good news for ZNGA and markets may begin to reflect that and Picus issue come Tuesday.
Of course the online gambling legislature matters could potentially be the biggest mover of ZNGA to upside next week although with politicians one has to wait until the final word is in (but it could be HUGE and depending on the news we may see a bigger move up than any of us could ever imagine).