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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Zynga Plunges: What Wall Street's Saying

Barclays analyst Christopher Merwin (Equal Weight, $3 PT)

"With the stock selling off in the weeks leading up to the print, Zynga followed up with 2Q results that fell short of our estimates on bookings and EBITDA. Management also lowered its full-year outlook for bookings by 10% at the midpoint, citing timing issues from a number of previously planned releases that were moved into 2H14. The silver lining, however, is that Zynga plans to expand into the sports and runners categories through exclusive deals with the NFL, Warner Bros. and Tiger Woods. We are lowering our 3Q and 2014 EBITDA estimates to reflect updated slate as well as new costs from the licensing deal. We are maintaining our Equal Weight rating and lowering our price target to $3 from $5 to reflect the likely volatility in Zynga's near-term performance as the company ramps investment into the new franchises."

Jefferies analyst Brian Pitz (Hold, $4.50 PT)

"Results and guidance were both worse than expected as Zynga shifts key titles into 2015 including Words with Friends, Poker, and several NaturalMotion games. With new license agreements, Zynga will release new NFL, Tiger Woods golf, and Looney Tunes games, which will also contribute in 2015."

Credit Suisse analyst Stephen Ju (Underperform, $3.50 PT)

"2H14 will bring the release of five new games for Zynga and as we have noted before, the primary catalyst we are waiting for is the creation of lasting new mobile franchises as it positions itself for growth. In the meantime, Zynga lowered FY14 expectations as certain games were delayed into 2015. We maintain our Underperform rating for now but with what appears to a cadence of ~ten games set for release in any given year, we have to note that the possibility of upward revisions to estimates is increasing given the more "at bats" the company will have."

BMO Capital Markets analyst Edward Williams (Market Perform, $3.25 PT)

"The company posted Q2 results that were toward the lower end of its guidance range and lower than Street expectations - bookings and adjusted EBITDA both came in behind consensus estimates. We believe the quarter's underperformance was driven by delayed launches of new games and features, as well as a steeper decline in the company's web business. The company posted sequential growth in bookings, adjusted EBITDA, mobile bookings mix and mobile audience for the second consecutive quarter, driven by its core franchises and the mobile launch of FarmVille 2: Country Escape. User metrics were up q/q across the board. We expect declines in Q3 with delayed launches, but expect to see a
rebound in Q4. Mobile bookings surpassed web bookings for the first time. The company also announced its entry into the sports category, as well as the start of licensing brands (NFL, Tiger Woods, and Looney Tunes)."

Sterne Agee analyst Arvind Bhatia (Neutral, No PT)

2Q results were below expectations, though within management's guidance range. As suspected, game delays caused management to lower full year revenue/adjusted EBITDA guidance by ~10%/40%, respectively (at the mid-point). Some of the announced titles for 2015 are based on licenses (NFL, Tiger Woods, Looney Tunes, which means lower margins on those games. All said, the head count (~2,000) seems too high relative to the current/announced titles.

Read More: Zynga, Struggling to Remain Relevant, Turns Back to Farmville

-- Written by Chris Ciaccia in New York

>Contact by Email.

Follow @Chris_Ciaccia

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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!
SYM TRADE IT LAST %CHG
ZNGA $2.30 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

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