Why Zynga Is Poised to Keep Plunging

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online social games operator Zynga (NASDAQ: ZNGA  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Zynga and see what CAPS investors are saying about the stock right now.

Zynga facts

   

Headquarters (founded)

San Francisco, Calif. (2007)

Market Cap

$2.8 billion

Industry

Home entertainment software

Trailing-12-Month Revenue

$1.3 billion

Management

Founder/Chairman/CEO Mark Pincus

CFO Mark Vranesh

Return on Equity (average, past 3 years)

(2.9%)

Cash/Debt

$1.3 billion/$100.0 million

Competitors

DeNA

Electronic Arts (NASDAQ: EA  )

Gameloft

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 50% of the 661 members who have rated Zynga believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, tunafizzle, summed up the Zynga bear case for our community:

Absurdly overvalued. Almost a billion shares out there, market cap is [$3 billion] for a company [whose] profits are negative and has zero products coming out. Any games they do generate revenue on are tied to [Facebook (NASDAQ: FB  ) ]. ... Lawsuits, over-valuation, no long term model will make this a penny stock soon. Short it long.

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Read/Post Comments (3) | Recommend This Article (8)

Comments from our Foolish Readers

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  • Report this Comment On March 18, 2013, at 7:48 PM, 9windsurfer wrote:

    Motley Fool is cunning when it chooses certain information to post about this stock. A few days ago there were positive articles from Motley Fool about Zynga (ZNGA). But let's just took a look at this article. The article starts out by saying there are 180,000 aggregate investors participating in the free online investing community. Then the article goes on to say out of 661 investors who have had an opinon on Zynga, 50% say the stock wil underperform they S&P going forward. Hmm, okay, so now it's down to 330 and 1/2 bearish opinions. The article mentions "almost a billion shares out there" but the numbers don't quite match up if there's only 474.86 million in the float, and there's a $200 million stock buyback going on. The article mentions "lawsuits" - but the most prominent one was just settled out of court with EA, and basically labeled "a waste of time." (EA's CEO quit today.) The article failed to mention any relationship between Zynga and Facebook, failed to mention any changes in the Nevada or New Jersey online gambling laws, failed to mention any significance of the bwin.party relationship and the introduction of 180 online games in the UK (real money gambling), and failed to mention Zynga's application submission to the state of Nevada. It failed to mention a deal with Hasbro toys, and failed to mention the extension of a relationship with Facebook out to 2015. Zynga's after hours news regarding Draw Something is their continuous headway to make Zynga a household brand name for viewers and players alike. Their game offerings see active use on a daily and monthly basis. Zynga's goal to bring their poker game and slingo to the mass market is one reason I will hold my shares long, and trade the waves. Seems to me like tuna will fizzle. Thank you. 9windsurfer

  • Report this Comment On March 19, 2013, at 7:33 AM, STICKYDOGSUXBALZ wrote:

    The Fool is just that.

    Unsubstantiated claims, misleading articles, unsupported biased rag at best. The original lopsided , do it your selfer posting claims to favor the side of their current company stock position.

    I think Motley Fool is one step down from getting stock information from th.e shoe shine boy. Bordering criminal. In short order, ZNGA will be moving significantly higher because of news pending about the online gaming situation. Announcements bearing gifts for shareholders with regards to agreements with big name casinos to utilize the # 1 Poker game in the world, putting kiosks to use again with ZNGA's top games...all propreitary IP.......etc . GLUU mobiles new game in Europe " Samarai vs Zombies" slot type game is a JOKE in comparison to Slingo, or ZNGA'a gambling games lineup. See you at 10.00 and quick. MF.........hang your head in shame with these dumb baseless articles.

  • Report this Comment On March 19, 2013, at 9:31 AM, possiblekicker wrote:

    complete rubbish, I'm cancelling my subscription to this baloney!

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