The best way to think of online game developer Zynga (ZNGA - Get Report) is that it's a sort of high-beta Facebook (FB - Get Report). In other words, any moves Facebook makes, Zynga makes too - just bigger. And since FB isn't exactly a stable stock itself, that's a scary thought. But Zynga's most recent price action is even worse than the norm.
Zynga slashed its outlook for the year late last week, sparking an exodus in shares that sent the stock down 41% in the last few market sessions. If you think the worst is over, don't. Statistically, it's likely that Zynga is going to continue to move lower.
That's because shares gapped down on the news. Yes, it's really as simple as that. According to research by market technicians Julie Dahlquist and Richard Bauer, downward gaps are shortable in the short-term.>>5 Stocks Under $10 Set to Soar While what Zynga does longer-term remains to be seen (in the long-term, gap downs often make up for lost ground), investors who don't want to keep getting hammered by this stock should look to sell. For another take on Zynga, it shows up on recent lists of 3 Internet Stocks Ready to Move Higher and 4 Stocks That Could Burn Short-Sellers.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts