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The market isn't valuing in ZNGA's gaming business much currently. |
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Released on Thursday, July 2, 2012, 10:00 PM ET
Pittsburgh, PA (SpeculatingStocks) - Zynga, Inc. (NASDAQ:ZNGA) shares have been beat up over the past few months and gapping down severely recently. ZNGA is now trading at only $2.70 a share, 52-week low levels and a far cry from investors that were calling for ZNGA to reach a market cap of $20 billion.
ZNGA is just trading at a market cap of $2.05 billion currently. Last quarter ending June 29th, 2012, ZNGA had cash, cash equivalents and short-term investments of $1.24 billion and property, plant and equipment of $499 billion. When you add in other assets, ZNGA's gaming business is only being valued around $200 million!
This is the company that created Farmville and acquired Drawsome last spring. Zynga is going through a rough patch with Facebook, but they understand casual gaming and it's just a matter of time before they turn it around. ZNGA has a huge cash safety net and they are the most stacked company employee wise in the casual gaming space with a great amount of experience in creating hit games.
The economy is surely hurting Zynga, which relies on people spending on low priced items within games and upgrading to paid apps. As gamers cut back on spending in their lives, this is surely one of the first things to go.
Zynga's revenue has been between $306 million and $332 million over the past four quarters. This is a tight range for a company that is supposed to grow by leaps and bounds. ZNGA has not lived up to investor expectations.
Now, is the time to look for ZNGA to turnaround though and for its stock to rebound. ZNGA looks attractively priced and undervalued at this time. Smart investors have been accumulating after the gap down on July 26th.
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