Why Zynga Inc. Stock Popped Today

The maker of FarmVille is attracting takeover interest. Here's what investors need to know.

Steve Symington
Steve Symington
Oct 9, 2018 at 3:45PM
Technology and Telecom

What happened

Shares of Zynga Inc. (NASDAQ:ZNGA) were up 12.5% as of 3:15 p.m. EDT Tuesday after Bloomberg reported that the mobile games specialist is a potential acquisition target.

More specifically, citing "people familiar with the matter," Bloomberg writes that Zynga has "received preliminary approaches" from multiple other game developers interested in a potential takeover.

Woman drawing image on a wall of a large yellow fish eating a smaller yellow fish.

IMAGE SOURCE: GETTY IMAGES.

So what

As the parent company of franchises like FarmVille, Words with Friends, and CSR Racing -- and with the added promise of a recently signed multiyear licensing agreement with Disney -- Zynga boasts an enviable stable of mobile game franchises. Further, with the stock trading roughly flat year to date and commanding a modest market cap of roughly $3.5 billion as of Monday's close, it's well within the financial reach of a number of larger game-industry peers.


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Now what

Still, Bloomberg's sources also caution that no formal talks have been held as of yet, so investors should be careful not to include an acquisition as a core part of their buying thesis. But given the prospect of a juicy buyout premium, the stock is understandably rallying today in response.