ZNGA (Zynga, Inc.) accounts for about 14% of FB (Facebook's) revenue. SET FOR OVER 80% NTT.
ZNGA (Zynga, Inc.) accounts for about 14% of FB (Facebook's) revenue. SET FOR OVER 80% NTT.
READ ALL OF THE FACTS BELOW
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Zynga Drags Down Facebook Shares
By Leah Powell
October 12, 2012
Facebook, Inc. (NASDAQ:FB) relationship
with Zynga has brought in tons of money due
to the success of games like FarmVille, but
along with that, bad news for Zynga is also
bad news for Facebook. A week ago, Zynga
revealed its “preliminary financial
results” a few weeks before its official
earnings report, not usually a good sign.
The FarmVille maker reduced its outlook for
2012 due to several problems like “reduced
expectations” for certain games, delays in
launching new titles, and a large write-
down on its purchase of game maker OMGPOP.
And, the bad decision to buy OMGPOP has
also reared its head. Zynga bought the
makers of Draw Something for $180 million,
and then a completely predictable thing
happened: people got bored with the game
because the word bank never changed, so
they stopped playing, and OMGPOP lost a lot
of its value. In the financial results,
Zynga took a write-down of $85 million to
$95 million on the value of OMGPOP, more
than half of what the company paid for it,
meaning that was definitely a bad deal.
I side with Analyst Michael Pachter on the
side of, "we're of the mind that another
big issue is that the casual gaming market
is incredibly fickle, which is why people
are called "casual gamers". People may get
addicted to tending their crops for a short
time, but it's incredibly hard to keep
people engaged when a game is all grind and
no payoff.
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"This is exactly why I am encouraged with
Zynga's launch with Facebook (FB) in
entering Markets such as Russia and Asia
where the Market Segment contains 10 Fold
the "Active Users" where MONEY is a key
motivator for User Retention with the "NEW
ONLINE CASINO & SPORTS BOOK" plan of
attack. Zynga currently has The Worlds
Largest Online Poker Community on The
Inernet and this Market Dominance is only
going to expand as Facebook (FB) and Zynga
(ZNGA) enter into the Online World of REAL
GAMBLING meaning REAL MONEY where The House
ALWAYS WINS," said RL Berger of BERGER 500
FINANCIAL.
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Zynga is also a large part of Facebook's
revenue stream, accounting for about 14% of
Facebook's revenue in the first half of
2012. In fact, Facebook's stock dropped 3%
right after Zynga made this announcement.
Zynga has released its "preliminary
financial results" well in advance of its
official Q3 financial statement and that in
itself is a red flag. Zynga is saying that
the company has earned about $300 million
Q3 this year, which is down from $332
million last quarter.
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RL Berger also stated that, "Accordingg to
The World Gaming Council's projections that
Zynga given the current structure will be
on pace to deliver in excess of 80% of
Facebook's (FB) revenues in 2013. The
exciting part of the equation is that this
does not account for the push by Mark
Zuckerberg to link up with Russia that has
Two seperate Social Networks that are each
much larger then Facebook in Active Users
and then we add Asia into the Online Gaming
Business Model can easily blow that 80% out
of the water. Zynga(ZNGA) is positioned and
poised to be the World's Leading Online
Casino and Sports Book in just a few short
quarters. ZNGA has the potential to be
worth $100's of Billion's in Market
Capitalization over the next year. As
previously stated. Do not expect much from
Zynga until 2013 until the Business Model
Launches."
Sentiment: Strong Buy