Zynga Inc (ZNGA)

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ZNGA: 'BEST EVER' 2017 AN EVEN BETTER 2018









WORDS WITH FRIENDS DOMINATES



THE PROCESSES ARE ALREADY IN PLACE FOR 2018 TO BE BETTER THAN 2017

TURKEY IS ZYNGA POKER’S THIRD LARGEST MARKET IN TERMS OF PLAYER NUMBERS.

ZYNGA’S NEW APPETITE TO MAKE THE MOST OF ITS RELATIVELY LARGE (AND RISING) CASH RESERVES,
2017 HAS DISPLAYED THE UNDERLYING ROBUSTNESS OF ZYNGA’S BUSINESS.

ON NOVEMBER 8, 2017

ZYNGA BROKE ABOVE RESISTANCE, AND THE BREAKOUT HIGHLIGHTED ON THE STOCK CHARTS IS SUGGESTING THAT THE MOVE TOWARDS HIGHER STOCK PRICES IS NOW IN DEVELOPMENT.


FY/2017 WILL BE ZYNGA’S MOST (AND TECHNICALLY ONLY) PROFITABLE YEAR SINCE IT FLOATED IN 2011.

IT HAD NEVER PREVIOUSLY STRUNG TOGETHER TWO CONSECUTIVE QUARTERS OF NET INCOME AS A PUBLIC COMPANY
INVESTING FOR FUTURE GROWTH


THE TWO MOST SIGNIFICANT EVENTS FOR ZYNGA IN 2017 WERE ITS ACQUISITIONS.






ZYNGA CEO: HOW THE COMPANY IS STAYING ON THE COMEBACK TRAIL

DEAN TAKAHASHI@DEANTAK NOVEMBER 11, 2017 8:02 AM

Above: Zynga has added new Ferrari models to CSR2 in honor of the car maker's 70th anniversary.
Image Credit: Zynga
VR Landscape
ZYNGA HIT ITS PEAK IN STOCK PRICE AND REVENUES A WHILE AGO. BUT THE SAN FRANCISCO COMPANY IS STILL A FORCE IN MOBILE AND SOCIAL GAMING. UNDER THE LEADERSHIP OF FRANK GIBEAU, A FORMER ELECTRONIC ARTS EXECUTIVE, ZYNGA HAS BEGUN TO TURN THE CORNER…


Source:

https://venturebeat.com/2017/11/11/zynga-ceo-how-the-company-is-staying-on-the-comeback-trail/




HOW ZYNGA'S 'BEST EVER' 2017 WILL RESULT IN AN EVEN BETTER 2018
NOV.10.17 | ABOUT: ZYNGA (ZNGA)

JONATHAN JORDAN

SOFTWARE, RESEARCH ANALYST, LONG/SHORT EQUITY

Summary

2017’s guidance of GAAP revenue of $843 million would be the company’s best since 2013.
2017 will be Zynga’s first ever profitable year as a floated company.
Combined with its Harpan acquisition, THE $100M PEAK GAMES’ DEAL FURTHER LIFTS 2018 SENTIMENT
ZYNGA HAS ALSO DEMONSTRATED A SOLID FOUNDATION THANKS TO OPERATIONAL FOCUS, CONTROLLED COSTS, AND STRONG MANAGEMENT TEAM.
Unless something untoward happens during the next six weeks, 2017 WILL BE ZYNGA’S (ZNGA) BEST YEAR SINCE FY/2013.
THAT’S BOTH IN TERMS OF ANNUAL GAAP REVENUE, WHICH INCLUDES DEFERRED REVENUE, AND THE MORE TRANSPARENT METRIC, BOOKINGS. Not that revenue or bookings really counts when it comes to Zynga.

MORE IMPORTANTLY, FY/2017 WILL BE ZYNGA’S MOST (AND TECHNICALLY ONLY) PROFITABLE YEAR SINCE IT FLOATED IN 2011.
YES, YOU READ THAT RIGHT. ZYNGA IS PROFITABLE AGAIN, AND BY Q4 WILL HAVE BEEN SO ACROSS THREE CONSECUTIVE QUARTERS. TO PUT THAT INTO CONTEXT, IT HAD NEVER PREVIOUSLY STRUNG TOGETHER TWO CONSECUTIVE QUARTERS OF NET INCOME AS A PUBLIC COMPANY.

And all this is without a major new product launch in 2017 and, at best, flat year-on-year ADVERTISING REVENUE, WHICH IN 2016 CONSISTED OF 26 PERCENT OF OVERALL SALES. IN 2017, IT WILL BE CLOSER TO 20 PERCENT.
Yet because this Q4 performance is expected, and however rational or perfect (or not) we consider the market, none of this should really move the dial.
Equally, the little we know about the company’s plans for 2018 are, at worst, irrelevant in terms of Zynga’s medium-term performance. Instead, your view on Zynga’s future should be based around the deeper trends, which became apparent during 2017.

INVESTING FOR FUTURE GROWTH

THE TWO MOST SIGNIFICANT EVENTS FOR ZYNGA IN 2017 WERE ITS ACQUISITIONS.

In March 2017, Zynga spent $42.5 million acquiring the ad-funded Solitaire mobile game from small time developer Harpan LLC. Given the already-mentioned weakness of the mobile advertising market in 2017, this has been a deal that’s yet to pay off, ALTHOUGH IT HAS ADDED SEVERAL MILLION DAILY ACTIVE PLAYERS TO ZYNGA’S TOTAL.
In such circumstances, the $100 million cash Zynga is spending to acquire the card and board game portfolio of Turkish developer Peak Games could seem like another, more speculative bet.
Zynga has said the deal will be immediately accretive, although given it’s not expected to close until late 2017, no uplift is included in Q4 guidance.
What’s more interesting about these deals, though, is they demonstrate joined-up thinking when it comes to Zynga actively seeking out acquisitions that will improve its ALREADY STRONG MARKET POSITION IN CERTAIN SECTORS. Indeed, it claims these deals make it the largest global publisher of casual mobile card games, which opens up all manner of synergies in terms of cross-promotional marketing and developing new markets.
For example, the strength of Peak’s games such as its Okey board game in the Turkish and Middle East markets gives Zynga insight into a new, fast-growing market, and one that is surprisingly open to western experiences. FOR EXAMPLE, TURKEY IS ZYNGA POKER’S THIRD LARGEST MARKET IN TERMS OF PLAYER NUMBERS.
The deals also demonstrate ZYNGA’S NEW APPETITE TO MAKE THE MOST OF ITS RELATIVELY LARGE (AND RISING) CASH RESERVES, currently $772 million pre the Peak deal closing. CEO Frank Gibeau notes the company will continue to ‘explore M&A opportunities that accelerate our genre leadership, drive audience growth, and enhance value for shareholders’.
“What we’re looking for are talent teams with franchises,” he explained in the Q3 analysts call.
In addition, post-Harpan but pre-Peak, Zynga’s CFO Gre Griffin stated the company’s deal philosophy was to be accretive from day one and paying back the principal within three years.
On that basis, c.$700 million provides plenty of potential accretive activity, which in the now mature western mobile game market is much more straightforward to evaluate. There will be no repeats of speculative deals like 2014’s $527 million NaturalMotion over-reach, let alone 2013’s $180 million OMGPOP disaster.
Not selling hockey sticks
Hopefully, Zynga’s 2018 won’t be just about buying users and growth, however.
Although no major games launched in 2017, the company released some smaller, experimental titles, especially what could be described as satellite games around existing hits. Words With Friends saw the majority of this activity, with the release of Boogle With Friends, Crosswords With Friends and GIFs Against Friends.
November 2017 also saw the release of Words With Friends 2, a sequel to the eight-year-old game that, as well as a new graphical style, brings in more competitive gameplay options, which in turn enable in-app purchases to become a more viable part of monetization. Previously, the game was ad-funded and it proved impossible to get IAPs into what was a much-loved legacy game.

In this context, 2018 should see the work that’s been carried out on the Words With Friends franchise start to result in much higher revenues, at least on a per player basis. The issue here will be how quickly existing players migrate to the new game.
Obviously, Zynga can encourage them in both active and passive ways, but clearly doesn’t want to force players who are committed to their current gameplay experience to move. As part of this process, the company will end up operating three games in the series - Words With Friends, New Words With Friends and Words With Friends 2.
When it comes to other launches, ALL WE KNOW IS THAT ZYNGA HAS NEW GAMES IN DEVELOPMENT AT NATURALMOTION’S LONDON AND BRIGHTON OFFICES, IN SAN FRANCISCO, AND IN ITS NEW HELSINKI STUDIO. THE Q3 FINANCIAL REPORT STATES THE COMPANY EXPECTS TO LAUNCH NEW TITLES IN SOME OR ALL OF ITS ACTION STRATEGY, CASUAL AND INVEST EXPRESS (THE VILLE GAMES) in the second half of 2018.
However, given 2017’s Mafia Wars reboot was canned in testing, it’s not sensible to expect any of these games to launch strongly, let alone be the next CSR Racing 2 and generate $100 million of annual bookings.
Or as Gibeau put it in the analysts call, “We have a saying around here, we don't sell hockey sticks.”
In this context, the shadow of Dawn of Titans - a much anticipated game but ultimately a commercially disappointing one - looms large.
STEADY RISE
Downplaying the potential of new launches may seem like negative spin, but it’s one that can be made in the hope it’s overly pessimistic, because, really, it doesn’t matter. 2017 HAS DISPLAYED THE UNDERLYING ROBUSTNESS OF ZYNGA’S BUSINESS.
FOCUSING ON LIVE OPERATIONS, AND WHAT GIBEAU LIKES TO LABEL ‘BOLD BEATS’, ZYNGA HAS DEMONSTRATED IT CAN CONTINUE TO BETTER MONETIZE ITS EXISTING 19 MILLION DAILY ACTIVE AND 72 MILLION MONTHLY ACTIVE MOBILE PLAYERS. For example, in Q3, Zynga Poker’s mobile bookings were up 81 percent year on year.
So, even if - like in 2017 - little new of note is launched in 2018, the combination of its acquisitions, together with the foundation provided by Zynga’s ability to keep current players engaged in existing games, means the company should remain solidly profitable.
Throw in the MANAGEMENT’S ABILITY TO KEEP DRILLING DOWN ON COSTS - DOWN 7 PERCENT year on year for the first nine months of 2017 - the addition of $168 million over nine years from leasing out part of its San Francisco office space to Airbnb (Private:AIRB) - and the company’s restated medium-term ambition to achieve a more than 20 percent EBITDA margin - currently running at 15 percent - and you’d be hard pressed to point to any major risks.
But, of course, they are always present.
Q3’s strong GAAP financials masked a flattening of consecutive quarterly bookings growth, while revenues and net income were lifted by a one-off boost of a couple of million dollars from the closing of NaturalMotion’s legacy technology licensing business.
Market sentiment also pushed Zynga stock down in after hours trading due to concern about weak Q4 guidance, although it’s since recovered.
Yet, as can often be the case, such a short-term focus is to misread the broader trajectory. Now ZYNGA IS SOLIDLY PROFITABLE AND MAKING SENSIBLE, ACCRETIVE DEALS, THE PROCESSES ARE ALREADY IN PLACE FOR 2018 TO BE BETTER THAN 2017.
Disclosure: I am/we are long ZNGA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source:

https://seekingalpha.com/article/4123195-zyngas-best-ever-2017-will-result-even-better-2018




THIS WILL DICTATE WHEN ZYNGA STOCK IS READY TO STAGE A MOVE

CREDITS: ISTOCK.COM/MONSITJ
ZNGA STOCK: THE BIGGER PICTURE IS WHAT IS IMPORTANT

I HAVE BEEN WATCHING ZYNGA INC (NASDAQ:ZNGA) STOCK BECAUSE A PARTICULARLY POWERFUL TECHNICAL PRICE PATTERN HAD BEEN DEVELOPING ON THE ZNGA STOCK CHART, and the resolution to this pattern was expected to yield impressive results.

THE PATTERN I WAS ORIGINALLY WATCHING WAS RESOLVED ON SEPTEMBER 15 AND AS A RESULT, I published a report titled “Zynga Stock Breaks Out, and These Are the Implications.” In that report, I outlined the developments suggesting that a move to the upside was expected. Instead of surging to the upside like I had assumed it would, another pattern began to develop, and it also has similar repercussions to the pattern that came before it.

BEFORE I MOVE FORWARD, IT IS WORTHWHILE TO POINT OUT THAT USING PRICE PATTERNS AS THE BASIS OF CREATING A VIEW ON AN INVESTMENT IS A METHOD KNOWN AS TECHNICAL ANALYSIS. I have been using this method of analysis to generate trading strategies for almost two decades. Although this method is not perfect, when it is applied correctly, the results are pertinent and cannot be dismissed.
I HAVE APPLIED MY KNOWLEDGE OF TECHNICAL ANALYSIS AND HAVE ANNOTATED THE FOLLOWING ZYNGA STOCK CHART IN ORDER TO HIGHLIGHT THE CONFLUENCE OF PATTERNS THAT HAVE BEEN PAINTED THE ZNGA STOCK CHART.

Chart courtesy of StockCharts.com
There are two distinct patterns highlighted on the Zynga stock chart.

The first pattern is a symmetrical triangle and it is characterized by a sequence of lower highs and higher lows. This pattern is easily identified by connecting the sequence of higher lows and lower highs, which creates two converging trend lines, giving this pattern its shape.
SYMMETRICAL TRIANGLE PATTERNS STORE ENERGY AS THEY DEVELOP. THIS RESULTS IN A PATTERN THAT ACTS LIKE A COILED SPRING, where the energy stored within it is finally released when the stock price either breaks above resistance or below support.

In SEPTEMBER, ZYNGA STOCK EXITED THE SYMMETRICAL TRIANGLE BY BREAKING ABOVE RESISTANCE, which signaled that a move towards higher ZNGA stock prices was in development. Unfortunately, that is not exactly what transpired because another pattern began to develop.

The second pattern highlighted on the ZNGA stock chart is a descending channel characterized by a sequence of lower highs and lower lows. This pattern is easily identified using the same method applied to the symmetrical triangle. This created two parallel downward-sloping trend lines, giving this pattern its shape.
This pattern is not as powerful as the symmetrical triangle, but THE REPERCUSSIONS REMAIN THE SAME when the stock price finally breaks above resistance or below support.

[ON NOVEMBER 8, ZYNGA BROKE ABOVE RESISTANCE, AND THE BREAKOUT HIGHLIGHTED ON THE STOCK CHARTS IS SUGGESTING THAT THE MOVE TOWARDS HIGHER STOCK PRICES IS NOW IN DEVELOPMENT.
The notion of higher prices is compelling but when I take a longer-term view, these two patterns paint a distinctly different picture.
The following Zynga stock chart illustrates the distinctly different picture I am referring to.

Chart courtesy of StockCharts.com

THIS STOCK CHART ILLUSTRATED THAT BOTH THESE TECHNICAL PRICE PATTERNS ARE IN FACT JUST ONE LARGE PATTERN DEFINING A CONSOLIDATION WAVE.
A CONSOLIDATION WAVE IS PART OF A TWO-WAVE STRUCTURE THAT IS RESPONSIBLE FOR CREATING AND SUSTAINING A TREND.
The consolidation wave that has formed is an ascending channel, which is a rare occurrence, because the majority of the time, these patterns refrain from advancing as they work off any overbought conditions created by the impulse wave that preceded them.
WORKING OFF AN OVERBOUGHT CONDITION CREATES THE NECESSARY ENVIRONMENT SO A NEW IMPULSE WAVE CAN DEVELOP. An impulse wave defines the stage in a trend when the stock price makes a substantial move towards higher stock prices.
IN ORDER TO SUGGEST THAT HIGHER ZYNGA STOCK PRICES ARE IN DEVELOPMENT, THE STOCK PRICE MUST BREAK ABOVE RESISTANCE OUTLINED BY THE CONSOLIDATION WAVE. THIS FEAT WILL SUGGEST THAT AN IMPULSE WAVE IS IN DEVELOPMENT, AND THEREFORE THE MOVE TOWARDS HIGHER PRICES THAT HAS BEEN ANTICIPATED WILL FINALLY TAKE PLACE.
ANALYST TAKE:
I HAD BEEN ANTICIPATING A MOVE TOWARDS HIGHER PRICES for a few months and have been frustrated by the lack of progress. I am currently watching the ascending channel in development on the Zynga stock chart. When ZNGA stock exits this channel in an upward direction, I will finally believe that a sustained move towards higher prices is in development.

Source:

https://www.profitconfidential.com/stock/zynga-stock/technical-analysis-znga-stock-moments-away-staging-move/