Zynga ($ZNGA) - Due Diligence (DD)
Updated: Apr 27
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30d Social Sentiment: Positive
Avg Price target: $13.30 (H: $15, L: $9) | Upside (at time of posting): ~30%
Analyst Recommendations: Strong Buy
Company guidance: Zynga CEO estimates a 32% growth for 2021 via acquisition and game launches
Recent Catalysts: Recent - March 3rd 2021 Acquires Echtra Games (of Diablo heritage), makers of Torchlight Upcoming Catalysts: Q1 2021 Earnings: May 5th 2021 Late 2021 - First Star Wars game (Star Wars Hunters) Long term: Expanding into advertisements- caused by their acquisition of Rollic Games
From Social - Zynga ($ZNGA) Due Diligence
created by /u/OurHolyTachanka
TLDR: Video games good. Mobile gaming is overlooked and under hyped. Long ZNGA. Premiums are cheap, LEAPS are free money. PT: $15+
Remember Farmville? The Facebook video game responsible for your parents divorce because your dad forgot to login and water mommy's corn and gourds? Words with friends, Farmville, Draw Something, and every app you ever downloaded on your first iPod Touch back in '09 was created by Zynga. These guys are the king of microtransactions, ad placement, and app downloads .
Zynga just reported earnings and shares jumped up 7% because the market liked what it saw. Zynga reported record revenue (+52% YoY), record users, record bookings (+61% YoY), record everything. This stock actually only goes up
5 year chart
Mobile gaming market: Everyone knows gaming is a hot sector. (I'm looking at you CRSR gang). What if I told you that mobile gaming makes up 45% of the gaming market? Everyone has a phone, 6 year olds are even walking around with iPads these days
Why Zynga?/ MOAT Zynga has been developing apps for over a decade. These guys have brand loyalty, they keep up with the trends and they know what gets downloads. I actually sat in an earnings call for the first time in my entire 3 day trading career and listened to what the company had to say about their future. Taken from the transcript here are some things that stood out to me:
• One of Zynga's core competitive advantages is our ability to create forever franchises that are highly engaging and can predictably deliver sustainable growth over long periods of time. A great example of this is Words With Friends. In 2020, the franchise delivered its best-ever annual revenue and bookings performance in more than 11 years since its launch in 2009.
New titles • Coming up next from our new game pipeline, are Puzzle Combat and Farmville 3. Both titles have been progressing well in soft launch and are on track to release worldwide in the first half of 2021. We also expect our first Star Wars game to enter soft launch in early summer with the potential to release by the end of the year.
Top Downloads/ Expanding into Asia
• A key driver of this performance was our growth in Asia, where we continue to enhance our ability to self publish titles including Toon Blast, which was the most downloaded game in Japan on Android in 2020... Over the coming years, we see more opportunities to expand into international markets as we execute on our growth strategies
• And so far, in Q1, two of our new hyper-casual titles, High Heels and Blob Runner 3D have already reached the No. 1 and No. 2 top downloaded U.S. game positions on Android and iOS.
• With our acquisition of Rollic, we ended 2020 with three of the top 50 downloaded U.S. iPhone games.
Data and Analytics
• At the core of Zynga's live services platform is our first-party data network which captures key insights about how our players are interacting with our games. We use this data to deliver highly engaging interactive experiences for our players optimize our user acquisition and determine how best to monetize our games, including advertising.
TLDR of that shit: Zynga has popular games, a loyal brand following, and an expansive machine for ad revenue. These guys advertise their other apps, in their own apps. Its like a virus, but one that makes you money