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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Zynga Remains Incredibly Cheap

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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