From a low-priced standpoint, you might ask, "How in the world can you be long ZNGA, but argue against F?" That's a fair question. The answer really does not diverge much from my thoughts on Tesla.
As ugly as things look for Zynga, it has a far less uncertain way forward than Ford does. Of course, Zynga must execute, but all else being equal, Zynga controls a greater share of its destiny than Ford does. In other words, economic and political uncertainty does less to derail a low-priced stock like ZNGA than it does F.
I am more confident that Zynga will be able to successfully migrate away from Facebook (FB) and monetize mobile than I am that auto sales will continue to grow in the U.S. (and that Ford will capture a lion's share of them) and that Europe's economy will not continue to have serious problems.
I also like the chances of a short-term bounce for ZNGA. Do not overlook the that the company has minimal debt and $1.6 billion in cash. Unlike a disaster such as Research In Motion (RIMM), Zynga not only has cash, it has first-mover advantage and a leadership position in social gaming.Zynga made some mistakes -- there's no question about it. Management might have even knowingly screwed shareholders. That remains to be seen. And there's no doubt, the company absolutely has to stop CEO Mark Pincus from speaking publicly. Frankly, he does a horrendous job at it. All of that said, the market overreacted last week. The market did not overreact, however, to the unmitigated implosion that is Radio Shack (RSH). What is the way forward at Radio Shack? I usually have a plenty to say. Often too much. I've got nothing here. But I will say this: Within five years, retail outlets, brick-and-mortar and online, that do what Radio Shack does or anything close to it will be, with one or two exceptions, extinct. Best Buy (BBY) and a local/regional electronics chain here or there might survive. Best Buy could get by because it's conducting a CEO search using the same firm that encouraged the bold (and smart) move of bringing Marissa Mayer to Yahoo! (YHOO). But that CEO has got to be a Silicon Valley type like Mayer (e.g., Stephen Gillett), and the board must allow him or her to go beyond feeble attempts at change such as reduced square footage and cheap knockoffs of the Apple (AAPL) retail concept.
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