Zynga Inc : Bet on Facebook IPO
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05/17/2012 | 09:47am
Opinion : Bullish above 7.5 USD
Target price : 10.5 USD
Stop loss: 7.39 USD
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NASDAQ
Leisure Products |
In the last strategy on Zynga, we forecasted a bearish trend and we showed its weak spot that is strong Facebook dependence. Tomorrow the games developer could take advantage from this weakness.
First quarter’s earnings release showed revenues up 32% to $321 million, but with net loss to $85 million against a one year previous’ net income to $6.5 million. These numbers were result of important investment made by the company. In fact costs for research and development have nearly doubled in one year. Non-GAAP earnings per share decreased nearly 50% to $0.06, but above JP Morgan’s estimates.
The company has been listed since 15th December and was introduced with price of $10 per share. During this period Zynga has seen the heaven and hell in fewer three months. In early March the stock was listed close to $15 per share, for this, the stock lost more than 50% to $7.50. This level has stopped the bearish movement and it is trying a technical rebound. We forecast a strong rebound towards $10, taking advantage from Facebook IPO. We advise attention seems the strong volatility on the stock, and we suggest a stop loss below $7.5.
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| Profitability |
2013e |
2014e |
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Operating Margin (EBIT / Sales)
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-3,52% |
0,20% |
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operating laverage (Delta EBIT / Delta Sales)
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-5,06x |
12,2x |
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Net Margin (Net Profit / Revenue)
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-5,86% |
-6,26% |
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ROA (Net Profit / Asset)
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-1,66% |
-1,93% |
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ROE (Net Profit / Equities)
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-2,08% |
-0,82% |
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Rate of Dividend
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- |
- |
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