Why Zynga Shares Popped
Feb 25th 2013 4:16PM
Updated May 21st 2013 4:35PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Zynga have popped today by as much as 16% after interstate online gambling inched closer to reality and the company also outlined cost reduction initiatives.
So what: Nevada legalized online gambling last week, which also opens up the possibility of the activity going interstate if other states sign on to offer cross-border gambling services. Zynga has been paving the way to transition its popular Zynga Poker to a real-money game, and investors have been anxiously awaiting signs of Zynga entering the lucrative market.
Now what: Additionally, Zynga also said it was consolidating offices, closing its Baltimore location while beefing up its Texas and New York offices. The changes are intended to reduce costs and increase efficiencies, while only affecting 1% of Zynga's workforce, according to COO David Ko. Zynga recently endured the departure chief game designer Brian Reynolds, who was based in Zynga's Baltimore studio. Both events have been enough to spark a Monday rally for the beleaguered social game maker.
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Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's "game over" for this newly public company. Being so closely tied to the world's largest social network can be a blessing and a curse. You can learn everything you need to know about Zynga and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.
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