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Gaming Growth Can Take Zynga to New Highs

August 17, 2014 | About:

The hiring of Don Mattrick as Zynga (NASDAQ:ZNGA) CEO was supposed to turn around the organization's prospects, yet a glance at the stock's performance so far this year indicates that nothing much as changed, as Zynga is still dropping.

Be that as it may, it can't be denied that Mattrick has brought about some impressive changes, and Zynga's focus on mobile should permit it to improve going ahead. The organization is making a decent attempt to establish its predominance in mobile, overcoming rivalry from the likes of Glu Mobile (NASDAQ:GLUU). However, will Zynga have the capacity to succeed in its attempt? Let’s figure it out.

Change likely to work out

Zynga's performance in the quarter was a case of a mixed bag, with revenue topping analysts' estimates. In any case, its losses were more than what the Street anticipated. The increase in losses was determined by restructuring costs as Zynga is attempting to revamp its business to focus on development areas. As such, given the stock is exchanging close to its 52-week lows, it may end up being a decent purchase considering the moves that it is making.

The organization is buckling down on Farmville 2, which was one of its key development drivers last quarter. Furthermore, Zynga's mobile games saw double-digit growth in the first quarter. Indeed, without precedent for Zynga's history, its mobile bookings are relied upon to surpass web bookings this year. Zynga is now advancing impressively on this focus as its mobile bookings have surged to 36% of aggregate bookings.

Zynga's turn into mobile gaming is an impressive diversification strategy, which the organization has pulled off exceptionally well so far and got a stable return.

Investments in franchises to drive development

As officially said, Zynga is experiencing a restructuring phase. Consequently, Zynga will keep investing to develop its franchises and sustain their performance. Its gaming advancement group is focused on giving a valid Casino experience to users. The modifications have been approved well by users, creating positive results in bookings.

In an alternate strategic move, Zynga obtained NaturalMotion to improve its gaming portfolio. As indicated by administration, "We remain confident and excited in NaturalMotion's long-term future growth and impressive slate of proven hits, technology, tools and new games. We are working together to develop growth plans for NaturalMotion's racing and people franchises, both of which hit meaningful milestones since the close of our acquisition."

This could be understood from the way that without precedent for two years, it conveyed sequential development across key performance areas such as bookings, adjusted EBITDA, mobile bookings blend, and group of onlookers. Going ahead, it plans to convey distinct and extraordinary consumer experiences, which will separate Zynga from its competitors.

As of late, the organization dispatched Farmville 2: Country Escape in 16 languages. Zynga's group joined some exceptional features in this diversion, which at present are not accessible elsewhere in the business. Some features, such as associated economy, permit players to connection their mobile experiences to their Farmville 2 web diversion. Determined by such features, the amusement has seen more than 4 million installs since dispatch, accepting positive criticism from players.


Moreover, it would appear that investor sentiment around Zynga is progressing. Furthermore, Zynga has a strong accounting report with no obligation and $782 million worth of cash. The company can utilize this strong cash position for acquisitions and research and improvement. At last, the organization's bottom line is relied upon to increase at a yearly rate of 30% for the following five years, which means that Zynga could be a solid pick.

Rating: 2.0/5 (1 vote)



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