Shares of Zynga(ZNGA) - Get Report rallied after the company appointed Frank Gibeau as its new Chief Executive Officer, replacing Mark Pincus. Analyst commentary was positive on the change, with one analyst calling Gibeau "a natural fit" to lead the social games maker.
GAMING VETERAN: Zynga said yesterday that founder and current CEO Mark Pincus will be replaced by Frank Gibeau. Gibeau, who joined Zynga's Board of Directors last August, spent more than two decades at Electronic Arts(EA) - Get Report , where he most recently served as the Executive Vice President of EA Mobile from October 2013 to May 2015. Gibeau will serve as Zynga's third CEO in three years and Pincus will become Zynga's Executive Chairman of the board.
SERIES OF CHANGES: The executive moves, which will be effective on March 7, comes within a year of Pincus returning as the company's CEO. Last April, former Microsoft(MSFT) - Get Report and EA executive Don Mattrick, as well as Chief Operating Officer Clive Downie, announced plans to leave the company. In an interview with The Wall Street Journal, Pincus said the leadership change "happened organically," and that he will remain "deeply engaged" in the company's day-to-day operations.
ANALYST COMMENTARY: Overall analyst commentary was positive on Gibeau's appointment as CEO. Jefferies analyst Brian Pitz called Gibeau a "natural fit" to lead Zynga as the company looks to grow its mobile gaming business. Pitz, who has a Buy rating and $5 price target on the stock, noted that Gibeau is "one of the most respected" executives in the sector, noting that Zynga plans to launch 10 new games in 2016, which should provide upward pressure on user metrics. As these games are released, Pitz expects Zynga's financials to improve. Wedbush analyst Michael Pachter also noted Gibeau's "wealth of experience," adding that he will bring a "level of operational expertise" to Zynga "that has been missing since Mattrick's departure." Pachter, who maintained an Outperform rating and 12-month price target of $4.25, said Gibeau's appointment "makes a lot of sense" given his track record and that his appointment will bring investors back to Zynga shares.
PRICE ACTION: In morning trading, Zynga rose 6% to $2.29. Shares are up more than 10% over the last week.
OTHERS TO WATCH: Other companies in the mobile gaming space include Electronic Arts, Glu Mobile(GLUU) - Get Report , Shanda Games (GAME) , Activision Blizzard(ATVI) - Get Report and Take-Two Interactive(TTWO) - Get Report .
Reporting by Laurie Pasternack Chan.
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