The fall out from the IPO of Facebook Inc. (FB) has continued to cause damage to social media companies that depend on them including Zynga Inc. (ZNGA). Down $13.61 from their March high, some Wall Street analysts like Needham & Company have issued bullish ratings on ZNGA stock while others like Bank of America and Piper Jaffray have continued to show their bearish sentiment. Considering that it’s now one of the top traded penny stocks on the Nasdaq exchange, is the social game provider worth a long look since at least one insider “Likes” it?
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ZNGA Stock Chart
Market Cap: 1.80B
Friday Close: 2.30, up 0.08 (3.37%)
Average Trade Size: 522
Issued and Outstanding: 179,596,824
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Zynga reported their Q3 earnings just prior to Superstorm Sandy shutting down Wall Street last week. For as miserable as ZNGA stock performance has been since March, the company’s current revenues are actually larger than those for the same periods last year.
Total revenues for the three and nine months ended September 40, 2012 came in at $316.64 million and $970.10 million, respectively, versus $306.83 million and $828.86 million, respectively, for the same periods the year prior. The problem, however, lies much in the costs involved to generate the increased revenues, nearly half of which for the nine months ended has been spent on research and development: $513.80 million.
Regardless of the one analyst’s recent “buy” rating versus many of the others’ recent “neutral,” “hold,” and “underperform” ratings, one insider decided to load the boat with ZNGA stock purchasing 250,000 shares last week at an average price of $2.242. (see here) Is there something they see in Zynga that only one other Wall Street analyst also sees?
About ZNGA Stock
Zynga Inc. develops, markets and operates online social games as live services played over the Internet and on social networking sites and mobile platforms. The Company generates revenue through the in-game sale of virtual goods and through advertising.
Click here to see the SEC filings for ZNGA, here for the Wall Street analyst ratings.
Bottom Line: ZNGA, like SIRI, is one of the Nasdaq penny stocks that is churned daily by day traders and long position takers and gonna need to wait to see anything more than 20%. Considering ZNGA stock is totally dependent on FB stock and their growth, any news involving Facebook will have a huge factor as to the direction this failed IPO heads to.
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