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$3.60 test coming should go much higher if broken
From Fly on the Wall this morning
Zynga risk/reward very favorable, says Susquehanna
Susquehanna sees the risk/reward trade-off for Zynga as very favorable citing its solid balance sheet, a competitive advantage for social gaming, and its second largest user base of US poker players which should attract strategic interest following the legalization of online Internet gambling.
thanks I believe they will be voting on this bill in March/April which should be another catalyst, Pennsylvania also soon... plus zynga plus poker/casino will be going live in the next few months .. lots of catalysts here
Good article on Seeking alpha
http://seekingalpha.com/article/1227291-zynga-a-strong-buy-at-current-price-levels?source=yahoo
Zynga: A Strong Buy At Current Price Levels
Feb 26 2013, 19:27 | 5 comments | about: ZNGA, includes: FB
Disclosure: I am long ZNGA. (More...)
Social media investments quite often offer little but an abundance of unnecessary risk. Last year showed example after example of this concern with wild swings and plummets during the first week of trading. The hype over companies like Zynga (ZNGA) and Groupon (GRPN) hit investors hard as revenue growth slowed much faster than anticipated. In addition, the Facebook (FB) IPO debacle showed that even underwriters didn't know how to value these stocks.
However, with some time to settle, it would seem some of these stocks are beginning to reflect a more reasonable valuation while positioning themselves with a high degree of growth potential. I predict that Zynga in particular will see a significant increase based on its aggressive strategy and innovative leadership.
The Pattern
As with any investment, one must look at the whole pattern in order to anticipate appropriate timing for investing. For instance, Facebook shares hit a 52-week high of $45.00 per share shortly after going public at $38.00 per share, then plunged to a paltry $17.55 for a 52-week low, in the final months of 2012. This year the stock has slowly, yet steadily, been rebounding, ranging between $26.00-30.00 in recent weeks.
This seems par for the course as stocks "find their footing." It could also be proof that other stocks in this sector are next to rally. As stated before, I see a strong possibility for Zynga's growth for several reasons.
Why Zynga?
On its first trading day, Zynga's stock closed just below the estimated $10.00 IPO price. After gaining almost 14 percent trading around $13.00 per share, it now hovers just over $3.00. This is the price investors would want to get in on, especially because of what is coming.
The launch of Zynga.com last year, its own gaming site independent of Facebook, allowed for stand-alone games and application widgets on other social networking sites. This was not a complete separation from Facebook. Players on the new site are still be able to log in with their Facebook IDs and play games with existing Facebook friends. In addition, Facebook credits are still the "currency" for all Zynga.com players.
Next, Zynga has done an outstanding job building its foundation. With assets of about $1.32 billion in cash and only around $100 million in debt, the company is not only securing its viability, but also setting investors up for big gains. Its cash-on-hand is equivalent to about $1.69 per share. That is considerable since the stock is now trading around $3.00. This indicates that the patents, game portfolio, brand name, and other assets are only being valued at just over a dollar per share. The smart investor can understand that these factors translate into a very cheap price for the stock.
Finally, Zynga is getting into an extremely profitable new business: online real-money gambling. According to a report from KQED, Public Media For Northern California:
In a partnership with Bwin, the world's largest publicly traded online gambling company, Zynga plans to release 180 real money games in Europe during the first half of 2013. Meanwhile, it is lobbying hard to legalize online gambling in the United States, where some analysts predict they could make a killing.
The company applied for a gaming license in Nevada earlier this year. It also recently launched two gaming websites called Zynga Plus Poker and Zynga Plus Casino for players in the United Kingdom. This is a smart strategy for the company, to get established outside the US and then use that experience to step into a leading position once online gaming becomes legal in the United States. Investors who buy into Zynga now might be getting a shot at investing in the next leader in online gambling.
It is interesting to look at how these two strategies are interdependent. With Zynga's new independent platform, it can capitalize on changes in gambling laws, whereas, if it were still tied to Facebook, the battle could linger. Facebook is a social site and has already taken the stand of protecting young users. The legalization of online gambling would be slow to be allowed into this "safe" environment, and even then only after a battle that would most likely cost both companies.
One also cannot boast Zynga without commenting on its foresight to "buy vs. build." This strategy alone allows it to be more profitable than other companies focusing on generating hardware/software in house. The company currently claims 240 million active users. With a new platform, this could easily double. Scaling to those heights would be costly for those companies who follow the DIY approach. Zynga's zCloud, however, is built upon cloud computing software by Cloud.com (now part of Citrix), its analytics platform is primarily a Vertica database (now part of HP), and its application servers run the Couchbase NoSQL database. This outsourcing strategy gives Zynga the leg up it needs to compete against companies with high operating costs.
A perfect example of this competition involves Activision Blizzard (ATVI), the creator of games like Warcraft, Starcraft and the Diablo series. Blizzard released its first installment of Warcraft in 1994 and has continued to release expansion packs that greatly improve the game's length and depth of play. These expansion packs operate on the company's own platform and boasts more than 10 million active users.
The expansions are inherently inexpensive to produce, as they are built on the same platform as the original titles and also relatively easy to advertise, as the captive customer base is already aware of and anticipating the next release. Even so, Blizzard relies on the creation and operation of these in house, increasing operation costs to a level far above Zynga.
Based on its financials and growth factors, Zynga looks attractive. Its calculated and measured strategy toward independence will be the foundation of its success. It is also prepared for consistent profitability over time by continuing to expand a customer base through expanded platforms and increasing revenue through advertising and new legislation with online gaming.
Governor Christie signs on-line gaming bill
http://online.wsj.com/article/SB10001424127887323884304578328293465612224.html
Yes I read that the law becomes enacted when signed
I mean laws....
Last week Zynga was going down fast , remember it was trading below $2.85 , just as the Nevada news came out, two days later it traded as high as $3.75. The first time this bill in New Jersey came out Zynga spiked in price . I think if you can be patient here there are many positive developments coming. California, Pennsylvania, Hawaii, Massachusetts all have bills in progress. THe UK web sites probably go on-line in a few months . Do your own dd I have...
There will be a vote today .. not sure if we get a signature but the vote is on at 2pm
MM's know the time of the vote is 2 pm so they filled the gap and took out all the stops now moving it back up, this is so obvious and blatant too bad people got stopped out here.
NO predictions where it will go but I am pretty sure that a headline of NJ passes online gaming bill will move ZNGA higher
I disagree it may open down but when the NJ legislature passes the bill later this afternoon based on previous reactions to these events it will not stay down.. we will see later..
Zynga CEO Mark Pincus owns directly or indirectly 120 million shares according to 13g filings
He is joint owner of Ogden Enterprises
Mark J. Pincus
93,163,318(1)(2)(3)
Ogden Enterprises LLC
27,765,634(4)
Percent of Class:
Mark J. Pincus 13.56%(5)(6)
Ogden Enterprises LLC 4.47%(5)
Zynga has a goal of focusing on mobile and on-line gaming. They already have zynga poker which is used by over 30 million people right now. The current poker does not take real money but the move by the states to pass on-line gaming will allow Zynga to partner with companies like Wynn , Caesars, Boyd or MGM and BWIN to allow for real betting. Many states are starting to enact laws to enable this. Nevada and Delaware have passed laws there are many states at various stages. New Jersey will be next possibly today, followed by Pennsylvania, Hawaii, California and Massachusetts plus many more at various stages.
Very soon in the next few months Zynga will launch Zynga plus poker/casino taking live bets in the UK in a partnership with Bwin. The UK is the worlds largest legal gaming market. They will use this experience to tweak their strategy when on-line gaming goes live in the US. Bottom line Zynga is poised to increase revenues far greater than the analysts have modelled. At some point they will upgrade Zynga.
Technically once Zynga gets past the last runs high around $3.75 there is no resistance for another dollar from there.
100% confirmation New Jersey will vote on the Gaming bill by the assembly and the Senate, they will forward it to Governor Christie, not sure if he will sign today or not but its a forgone conclusion he will sign it. The new bill contains all the changes he asked for. The voting should be around 2pm.
No hard feelings. Good for you. Today New Jersey will pass their on-line trading bill, this should help Zynga
how do you know?
CNBC going to talk about Zynga right now
Did you see how the general market were today.. Dow down 150 in last hour very bullish trading today now 3.53 very bullish
Take a look at this article I co-wrote on Zynga
http://seekingalpha.com/article/1219851-zynga-s-valuation-amid-changing-online-gambling-markets?source=google_news
Most major investment firms have major interests in companies...Morgan Stanley, Goldman Sachs.. plus you might also infer that they have management's ear so they are more attuned with what the company is doing , so it depends on how you want to look at it..
Zynga will be presenting tomorrow so there could be some news from there, it won't be till after-hours though
New article on Seeking Alpha that I helped write:
http://seekingalpha.com/article/1219851-zynga-s-valuation-amid-changing-online-gambling-markets?source=kizur
What do you guys think?
I published an article last week on Zynga (ZNGA) that focused on the progression of online gambling legislation. After receiving feedback asking what ZNGA has already done in preparing for online gambling and wondering which states had legislation on track to be passed, I decided to get the information and links together and answer questions regarding all aspects of ZNGA and its journey to the online gambling market.
Federal Gambling Laws and Limitations
On Oct. 13, 2006, President George Bush signed the Unlawful Internet Gambling Enforcement Act into law. This law banned internet gambling and created a task force to stop and punish violators of the law. For instance, BWIN Party Digital Entertainment -- which recently teamed up with ZNGA -- had its poker platform PartyPoker.com shut down in the U.S. in 2006, causing its stock to trade 60% lower.
The excitement to get back in the game has been halted, however, as federal as well as state legislation pending approval prohibits former sites from operating for five years minimum. This leaves new faces like ZNGA, previously an online social gaming site partnered with Facebook (FB), to point their future efforts toward Internet gambling in an effort to snatch up the available U.S. online gambling market.
Zynga Gambling U.K. Partnership
The U.K. is currently the largest online gambling market in the world. At the forefront of this market is BWIN Party Digital Entertainment, which is a company consisting of a BWIN and Party Gaming (PartyPoker.com owner) merger. It teamed up with ZNGA to further pursue online gambling in the U.K. In 2012, online gambling in the U.K. raked in $2.5 billion and gambling in Europe overall is predicted to reach $42 billion in 2015. This, however, is not even the most staggering statistic. In 2010, there was a 30% growth in online users from the 2009 numbers (which was already 5.6% of the adult population). If this growth trend continues across Europe, the market could size could double in the next five years.
ZNGA, while pursuing everything from real money poker and blackjack to virtual slot machines, has seen a future that has a vast market for growth and innovation. On this subject, Mark Pincus said in January that the "amount of innovation you're going to see around gambling as an entertainment mechanic is going to be mind blowing."
The foundation for this innovation is an exploding gambling market. When poker was legal in the U.S. from 2001-05, revenue grew from $82.7 million to $2.4 billion. Internationally, online gambling generated $117.6 billion in 2011 and is predicted to grow annually at 9% to reach $182 billion in 2015. According to MSN Money, online poker alone could generate $6 billion to $8 billion a year.
State Gambling Legislation
Legal gambling in New Jersey and Pennsilvania was $3.05 and $3.16 billion, respectively, and they are just No. 2 and No. 3 on the U.S. gambling list. No. 1 last year was Nevada, making a whopping $10.8 billion. Nevada believed gambling was moving to an online venue in the future and wanted to ensure its place in the emerging market. Below are states considering legislation concerning online gambling and a timetable for completion of the legislation:
California -- Reintroduced a bill, and expected to vote between March and April.
Deleware -- Fully passed Online Gambling Bill and are currently putting infrastructure into place to get it up and running by September.
Florida -- Considering a bill, but could be next year before approval. They estimate online gambling will produce $10 million in tax revenue starting out.
Hawaii -- Proposed a bill, but are still waiting for support and have no real timetable, but would like to move quickly as they see possible revenue from Asian markets as well.
Illinois -- State Rep. Bobby Moak, D-Bogue Chitto, is rolling the dice again in the 2013 legislative session on online gaming legislation that could have a profound impact on the future of legal gaming in the state. The bill would have a 5% tax and limit licenses to companies already with land licenses in the state.
Iowa -- Are looking to move quickly on a gambling bill as they estimate 150,000 people in their state already illegally online gamble on offshore sites.
Maine -- Having been discussed for over a year now and not gone anywhere, it does not seem important on the agenda even though the idea is frequently thrown around in committee.
Massachusettes -- Proposed by State Treasurer, would allow online Social card games, fantasy sports, and the lottery.
Mississippi -- Failed to get bill out of committee so far.
Native American Tribes -- Have proposed and discussed bills, but need federal legislation to allow population to gamble on a Native American land-based gaming server.
Nevada -- Signed into law a bill that legalizes online gambling and sets up framework for interstate online gambling.
Pennsilvania -- Will introduce their online gambling bill this week and is expected to pass within the week.
Texas -- Proposed Poker Gambling Act of 2013 but does not have a timetable and has considerable resistance.
Washington -- Proposed bill legalizing in home online gambling, has yet to be voted on. Should be resolved in the next few weeks.
Why Zynga Has an Advantage in Future Markets
According to The New York Times, online gambling from mobile devices will be $100 billion by 2017. Coincidentally, ZNGA has set its primary focus in social gaming at increasing its mobile usage in an effort to transition its 300 million monthly users away from PCs and toward mobile applications (a transition that was 25% complete according to Q4 2012 data released in February).
Currently there are many online poker sites internationally that will compete with ZNGA in current markets and future markets if the U.S. continues to open up to online gambling. What sets ZNGA apart from other gambling sites is its connection to the growth of social media sites such as Facebook, LinkedIn (LNKD), and Twitter (which is yet to go public). If the market continues moving in this direction, then ZNGA, which is the No. 1 social gaming site in the world, will be poised to take a dominate roll in the future of online gambling. Its 89 patents -- mostly from Walker Digital -- based on online social gaming will create a new unique platform that is protected by its patent portfolio. In addition, the legalization of online poker in the U.S. according to a Goldman Sachs could create $12 billion in revenue alone, an estimate nearly twice as much as previously thought possible.
According to a research report by KPMP titled "Online Gaming: A Gamble Or A Sure Bet?," one of the four key drivers that will shape the industry over the coming years is:
Combining online gaming and social networking: social networking will be a key driver of activity and growth in the online gaming world, as it represents a natural extension to users of digital and mobile technology. Social networking's role in driving online gaming is especially significant because of its high levels and ease of remote access.
Conclusion
ZNGA has been priced as a terminal company until recently. Its share price reflected only a 50-cent above cash valuation that was due to many analysts believing ZNGA would never become profitable and soon fail. With its partnership with BWIN Party Digital Entertainment and its hire of key executives, ZNGA has made a determined effort to become a serious player in the international and U.S. real money gambling market. With the move from traditional web-based gambling to interactive social media style gambling inevitable, ZNGA appears to be at the right place at the right time to become a dominant force in the near future. If ZNGA can even manage to take 1/1000th of the current global online gambling market, it would generate enough revenue from gambling alone to justify its current market price.
If you can see ZNGA gaining any more than 1/1000th share of the global gambling market, or having any profit from its current games, then it seems imperative that the stock valuation will be increased. As ridiculous as this scenario seems, the downplay of the importance of its move to real money gambling has been worse. Starting with the Morgan Stanley Conference that ZNGA is presenting at on Monday, I think that there will be a huge course correction by institutions raising price targets to between $7 and $11, which I believe is still a conservative valuation.
In case people doubt where Zynga is going, this article and comment by the CEO should leave no doubt. The analysts have not modelled an intense move to on-line gaming ...yet
http://pokerfuse.com/news/law-and-regulation/zynga-applies-nevada-online-poker-license-06-12/
CEO Mark Pincus predicted in January: “The amount of innovation you’re going to see around gambling as an entertainment mechanic is going to be mind-blowing.”
The immediate future of its strategic move into real-money gaming is visible in its partnership with bwin.party in the UK. Real-money games using the bwin.party platform are expected to start in the first half of next year. Zynga’s UK customers who choose the online poker offering will be integrated into bwin.party’s main player pool.
The Nevada Gaming Commission was reported to have expressed some concerns over bwin.party’s operations in international markets when it granted MGM its license approval. MGM partnered with bwin.party and Boyd Gaming over a year ago in anticipation of a legal framework being established.
Success in the UK operation will presumably make bwin.party the natural partner for Zynga’s US operations making the esteem in which bwin.party is held by regulators an important issue.
Zynga could be a potentially huge player in real-money gaming if it can translate its army of players into real-money customers. Pursuit of real-money gaming in Nevada and and other regulated markets may depend on how successfully it can convert play-money players in the UK next year.
http://www.infiniteedgegaming.com/business-development/playing-around-with-zynga-poker-numbers/
The largest listed online real money online provider is Partygaming. They earn roughly $15,000,000 per month in rake revenues. To match that, Zynga Poker has to squeeze, on average, fourty cents out of each session. That’s equal to engaging in a couple of hands of 0.25/0.5 NL depending on how rake is distributed.
The cheapest official Zynga chips purchase I could find was $2.30 for $150,000 chips. So if every fifth Zynga session leads to a player going “broke” and reloading, I’m easily matching Partygaming in revenues.
This doesn't take into account advertising revenues. With on-line gaming in the US becoming a reality there will be a tidal wave of revenue opportunities for Zynga
Yes I agree. Once the previous run's high gets taken out not much resistance to fill that gap. I actually think this could happen this week ...
No surprise....bashers only come around when the stock declines, usually their concerns are b/s. His issues are basically what the analysts issues are,. THe stock is being valued as a terminal business which it is not. This is why they have not upgraded but will when it gets to $5. Most analysts are not proactive, they wait for the numbers and then react. Witness the surprise last q numbers provided. As I said in an earlier post Zynga is transitioning to mobile and on-line gambling which is where big money exists. Pokerstars made 5 billion dollars on illegal on-line gambling, should be a clue as to the size of the market.
The hire of Myal Ginzburg who was with 888 holdings should also be a clue. Once these guys get it investors will have moved the stock much higher. Witness my two favourite examples. No analyst had Groupon as a buy at $2.60 -$ 2.80 now around $6 it is upgraded? No one saw that Blackberry was going to survive ( although I have issues longer -term) at $6 it was considered DOA. After a 400% move some analysts started upgrading? The same will happen here. Next week is a big one for Zynga, Morgan Stanley conference Monday, New Jersey on-line gamine law most likely Tuesday... upgrades most likely....Cramer says it has bottomed and he hates the stock. This should be the biggest clue what is to come, where big money is here.
Last August Zynga quietly made a hire who's impact is now being felt. This person is responsible for transitioning the company into on-line gaming. While the analysts continue to fret about their games Zynga is quickly establishing their vision for a renewed company:
Here is the person who will help transition Zynga. Take a look at her background:
8/30/2012
Zynga has added some firepower to its online gambling ambitions.
AllThingsD has learned that Maytal Ginzburg is joining Zynga as the company’s chief operating officer in charge of new markets, according to her LinkedIn profile.
As recently as July, Ginzburg was the SVP of regulated markets at 888 Holdings, where she was responsible for acquiring customers and other operations.
888 Holdings operates an online portal at 888.com, offering real-money games such as poker, bingo and sports betting, in markets where online gambling is regulated. More recently, it started to investigate the opportunity in social and mobile gaming through the 2010 acquisition of Mytopia from Real Dice.
Ginzburg has not yet started to work at Zynga, but is expected to begin soon. Social Casino Intelligence was first to point out that she was hired by the company. A spokesman declined to comment.
The hire is important for the Facebook games maker because it shows that, while a number of executives have decided to leave, it can still recruit talent at a very high level.
During the company’s last earnings call, CEO Mark Pincus confirmed that Zynga’s first real-money products were in development, and that it believes it has a huge opportunity to leverage its strong casino presence on Facebook, including with Zynga Poker and newer properties, like Bingo and Slots. Pincus said he expects to launch Zynga’s first real-money gaming products in international markets in the first half of 2013, subject to licensing approvals.
At this time, it’s unclear what Ginzburg will be doing at Zynga, but from an interview she conducted with a U.K. publication, you can tell Zynga was very much on her radar.
She told Inside Poker Business that she believed it was important to integrate social features into 888’s existing products in order to make interactions less serious and more welcoming to casual players. One product that social features helped with was PokerCams, which allowed users to see who they were playing with online.
“We want to attract players who will play for casual entertainment, and we therefore needed to deliver social platforms that are easy to use yet provide all the interactive features users expect,” Ginzburg told Inside Poker Business, adding that “the biggest risk we were running was that casual players avoided the product because of a lack of interaction, which is why so many have gone to Zynga.”
Maytal Ginzburg Olsha, the former senior vice president of corporate and regulated markets at online gambling firm 888, is becoming the chief operating officer of new markets for the social gaming company, as first reported by Social Casino Intelligence. She reports to Zynga executive Barry Cottle, executive vice president of business and corporate development.
Cottle said, “Maytal Olsha is a fantastic addition to Zynga. She joins our team with a deep understanding and direct experience in getting online gaming product offerings off the ground and directly into the hands of players. She is a strong advocate for integrating social features into real money offerings in order to make them more appealing and interactive for casual audiences. Maytal’s arrival is a win for Zynga and our player network.”
Even as a bunch of executives have left the company in the wake of a weak earnings report, the new hire shows that Zynga can still bring aboard some talent where it needs it. Ginzburg Olsha will be helpful in bridging Zynga’s social casino business with the complex, heavily regulated world of real-money gambling.
In a statement, Ginzburg Olsha said, “Zynga is at the forefront of the next evolution of games and entertainment. The company has already built enthusiastic, engaged communities around free social casino games. And as we move down the path towards real money offerings we will be listening carefully to our players to align with the right potential partners and offer the best gaming experience possible. Zynga is made up of incredible talent and dedicated leaders and I am proud to have joined the team.”
Read more at http://venturebeat.com/2012/09/13/zynga-confirms-it-hired-real-money-gambling-chief/#TS5w5HKqeZpKcRUC.99
This is a highly volatile stock having a beta close to 4, this means it is 4 x more volatile than the index. Now with respect to next week. There are several catalysts. First the stock closed with a massive after hours Friday trading over 1.1 million shares and up almost 6 percent after hours 13% overall. Cramer said on his show that "Zynga has bottomed". I say he is a mouthpiece for Goldman Sachs where he used to work. If he is saying this you can bet Goldman is positioned for the move up. Next on Monday after hours Zynga will be presenting at the Morgan Stanley conference so there could be some news coming out of that or upgrades later in the week. On Tuesday New Jersey is expected to sign an on-line gamin bill
which should boost Zynga's share price. There will be dip opportunities but I think Zynga as Cramer has said is in a powerful up phase that should move it into the $4's.
Good luck
With the volatility of this stock why would you? A .50 cent swing in two days, personally I would rather sell the option but its not my call
One word of advice if I may. Once it trades above your buy level put in a stop loss to protect your trade. Better to take a small profit than to turn it into a loss again.
You can't exercise your calls till April. You can sell them whenever you want but can only exercise them when they expire... Zynga has a beta of almost 4 which means it is 4x more volatile than the market so it can move in any direction up/down quickly as we saw this week.
Initial momentum should be to the upside, watch for fake reversals or fake upside mm's do this in pre-market because its easier to do
Once it breaks through the $3.40 area it should take another run at the previous high. on the reversal ($3.75 -$3.80)...there is a lot of momentum here now. 12 million shares moved Zynga from $2.82 to $3.02 the other day. Today the shorts flashed a 2.1 million shares sell order @ $3.15 it was a fake offer as the shares were trading off the ask the mm removed it, then it went to $3.21 quickly. After hours Cramer said Zynga had bottomed... volume exploded....
Next week on Monday Zynga is at a Morgan Stanley conference after hours, Monday or Tuesday New Jersey should sign their gaming bill, possible upgrades also next week
Probably not pre-market but you never know mm are very sneaky... lot of shorts have not covered here.. big surprise for them Monday
Zynga will be over $4.00 next week lots happening here
Your golden with those...
Now $3.35 on 850,00 shares after hours... will gap up and test $3.75 next week
In case anyone is following this .. Cramer just said Zynga has bottomed .. time to buy.. trading huge volume After Hours
Typical basher, they show up only when the stock is down and then run and hide when its' up. No wonder they call them "bears"
http://investor.zynga.com/eventdetail.cfm?EventID=125148
Events & Presentations
Morgan Stanley Technology, Media Telecom Conference
Feb 25, 2013
4:35 PM PT
Listen to webcast
Plus New Jersey will sign their bill, California in March... look for upgrades next week. the crooks always bash a stock to get out of short positions and so they can load up then they upgrade...