Why Zynga Shares Surged

Is this meaningful or just another movement?

Evan Niu
Evan Niu, CFA
Sep 14, 2012 at 12:00AM
Other

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 social gamer Zynga (Nasdaq: ZNGA) surged today by as much as 11%, after the company confirmed that it had hired a new executive to lead its big push into online real-money gambling.

So what: The hire had been reported earlier this month, but the company has now officially confirmed that Maytal Olsha is now Zynga’s chief operating officer of new markets. The game maker also said on the last conference call that it plans to roll out into international gaming markets as early as next year, assuming it can obtain all the necessary regulatory approvals.

Now what: News of an executive hire is welcome.  Zynga has seen a massive exodus of high-level execs, many whose positions started with "chief." Olsha will report directly to exec Barry Cottle, the last remaining of the three executives who Zynga poached from Electronic Arts within the past couple of years. Getting into real-money gambling is potentially a major positive catalyst for Zynga, considering its massive player base of casual gamers.

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