This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Zynga Remains Incredibly Cheap

Stocks in this article: ZNGA FB

NEW YORK (TheStreet) - Zynga (ZNGA) shareholders couldn't be happier after the company gave a welcomed surprise on Thursday. The company reported earnings early, and they were fantastic. The announcement came early to coincide with announcing the acquisition of NaturalMotion. NaturalMotion is a leading mobile game developer known for games that include CSR Racing and Cumbsy Ninja.

If you followed my buy recommendation on Real Money Pro, you're up over 20% in about 10 days. Shares are currently up 16% to $4.36.


WATCH: Zynga Buys Maker of Clumsy Ninja and CSR Racing in Mobile Push

Zynga will pay $391 million and approximately 39.8 million shares for a total consideration of about $550 million (using Friday's price at the time of writing). About 11.6 million shares are subject to a three-year vesting period. NaturalMotion is expected to be accretive in 2014 on a non-GAAP basis. I'm not a strong believer in non-GAAP numbers, but it does appear later in 2014 or by 2015, NaturalMotion will add forward income momentum.

NaturalMotion adds a new plateau of professional quality control in terms of customer experience. If Zynga's games were not addictive enough, NaturalMotion takes it to an entirely new level. After the purchase, Zynga remains incredibly cash rich at $1.2 billion. While the purchase is fantastic news, I'm more excited reading every key metric to profitability improved.

It's too early to know how much revenue Facebook's (FB) entry into U.K. poker will bring to Zynga as it only started this month. However, the partnership should add revenue and earnings starting with the first quarter 2014. More important, investors will gain significant insight on what to expect as both Zynga and Facebook expand into other markets. While significant, the U.K. market is a drop in the bucket compared to the rest of the world.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,461.67 +74.46 0.43%
S&P 500 2,040.09 +10.54 0.52%
NASDAQ 4,729.64 +48.1430 1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs