Zynga sees better results after sinking share prices for almost two months – Part 2

Bhatia will look at Zynga’s daily traffic, too, which was down some 6% in December and up just 2.8% for the year, according to Appdata.com, which tracks Facebook applications’ traffic. If Zynga fails to bring in new users—people possibly more willing to pay—it must turn existing users into payers. Bhatia doubts Zynga could do that on a large scale.

Zynga’s closest rival in the social-gaming market is Electronic Arts. EA’s The Sims Social was the second most popular game on Facebook last year. (Playdom’s Gardens of Time was No. 1, followed by Zynga’s Cityville in No. 3. Zynga also had Nos. 5, 6, and 8.) Zynga’s other competitors include Glu and Activision Blizzard.

Zynga closed down 4.6% at $12.77 Wednesday. It was an off day for all of Wall Street, which saw a historic day Friday. The social media tracking fund, Global X Social Media, fell 2.2% to $14.88.

And don’t bet on a long-term marriage between Facebook and Zynga. Facebook will soon need to please public shareholders—a very different relationship than pleasing private investors. To grow, Facebook could add social games from other developers, Bhatia says.

Other analysts, including Hudson Square Research’s Daniel Ernst, don’t believe Facebook and Zynga will ever part—the current deal between the two companies expires in 2014. Also, Zynga announced a project called “ZLive” last October. It would become Zynga’s own gaming platform but require a Facebook account to access. Nothing has been heard since the initial announcement. Plus, there was no talk of how ZLive would help Zynga’s monetization woes.

For now, Bhatia cautions against treating Zynga as your real world cash cow. He’s kept his underperform rating and set a $7 target.

“Let’s see what happens Feb. 14. That will be very telling of investors’ reaction,” he says.

Short URL: https://www.newspakistan.pk/?p=11931

Posted by Usman Khalid on Feb 7 2012. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.