Don't give up on ZNGA, I trade sub $10.00 stocks and I know how this game goes. If you don't mind I would like to share my experience with Groupon last year. Do you remember when earnings came out so nasty and it hit the upper medium $2.00 range? I waited until the volume stalled and loaded up. Out of luck, as i was buying 40,000 shares of GRPN at $2.75 range, I held even if I had to take a paper loss and low and behold, Carl Ichan announces he has a position in my Groupon! Then goes the CEO and more change is coming our way in Grupon, the stock hit $9.00 with support by Carl Ichan and other groupies wanting to catch a turn-around play. My luck was not so much luck, it was a educated guess that a company gets a "Honey Moon period", we have a killer CEO and after volume dries up and people start collecting shares we are heading back up! I bought some today, only 6,000 shares to start the dance over again. I sold my previous position I bought at $3.09 in t0 into the hype back at $3.53 because there was not enough news and other things were flickering in my eyes! Jim Crammer has been screaming "Buy" "It's to late to Sell, it's time to Buy!" I think if you believe this CEO can bring change and is highly competent like the beautiful CEO of Yahoo, ZNGA is going to take some time to re-brand and relearn their role in the Market Place. Facebook's revenue growth with Mobile was awesome, ZNGA has $1.3 Billion in cash last time I looked. ZNGA is still on the honeymoon, this last for six to nine months like RIMM(BBRY) got and soon our price in ZNGA after the Mutual Funds dumping it for tax-loss balancing along with other funds matching capital gains with losses, I think we will make a buck!
ZNGA still has a ton of cash and basically no debt. I expect the new CEO will trim the fat For all the ZNGA is dead talk ... most people don't realize ZNGA did more revenue than LNKD in the last year.... (says Yahoo). Sure that will change this quarter but it underlines how beaten down ZNGA is and how overpriced LNKD is IMO LNKD is at 20x and FB is at 15x REVENUES - (I don't know if it's correct, but Yahoo says PE's of 800 & 700 respectively.) Did we not learn from the dotcom bubble ? WOW
All these tech valuations are insane, they always have been. The IPOs of these techs are simply pay days for venture capitalist. They may be okay for gambling, but as an investment, you'd be a fool.
I don't know how anyway could say the ZNGA fundamentals are good, they lose money every year. Why would any one pay billions for a company that looses money. Sure,it's easy to get tons of customers when the price is zero. Imagine how many pizzas I could deliver if there price was zero and free delivery. Last year they lost something like 200 million dollars. Of the top of my head I imagine that would be something along the line of having around 100 pizza shops giving free pizzas year round.
Zyngaâs biggest hit by far was Farmville but now that thatâs gone thereâs nothing left. Wouldnât touch them with a thousand foot poleâ¦
The problem is that developing successful new games is incredibly difficult. It's even more difficult within the limited confines of Facebook (Zynga) or mobile (Angry Birds). Among the most successful new game studios of the past 20 years has been Blizzard Entertainment. They have primarily 3 games on the PC that they have expanded into later versions with great success: Warcraft, Diablo, and Starcraft. I myself used to be a StarCraft addict. I think the very thing that made Zynga successful, i.e. Farmville's viral popularity spread through Facebook, also doom it to failure because the inability to expand on Farmville's success with Farmville 2 and 3.