August 5, 2012
Zynga took quite a beating after its last earnings, but Senior Technology Analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips continue to warn investors against investing in Zynga and its Facebook-dependent business model. Zynga, a supposed growth company, warned investors by slashing bookings for the year, all the way down to around $1.2 billion from guidance that peaked at $1.5 billion just last quarter. That's a dramatic turn, and it shows just how much the company's growth has hit a plateau.
While many analysts claim the company has little downside because it has $1.8 billion in cash and real estate, Eric thinks it will spend this cash on new gambling ventures and buying mobile growth, which rapidly evaporates. The end result? Zynga's cash doesn't present downside protection, because it'll all be needed to buy growth, and the company's not going to fire-sale its real estate any time soon. As Eric and Jeremy see it, Zynga is a company to sell at any price.
Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder whether it's "Game Over" for this newly public company. While Eric and Jeremy have written off the company, investors looking at buying a "falling knife" like Zynga should make sure to do their research before jumping in. You can learn everything you need to know about this company 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.