NEW YORK (TheStreet) -- Shares of Zynga  (ZNGA) - Get Report continued to rise, up 6.97% to $2.61 in morning trading Friday, after the company debuted its new mobile runner game Looney Tunes Dash! earlier this week.

"While the setting will instantly evoke memories for Looney Tunes fans, we're also delivering a unique experience based on the requests we heard most often from players - a Runner game that rewards completion and puts new challenges around every twist and turn," Zynga said.

Zynga, which debuted the massive hit Words With Friends in 2009, has a rapidly growing mobile business that could "move the needle," and offset the headwinds around its legacy Facebook and web game business, according to a research note from Jefferies.

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Separately, TheStreet Ratings team rates ZYNGA INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZYNGA INC (ZNGA) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 83808.8% when compared to the same quarter one year ago, falling from -$0.07 million to -$57.06 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, ZYNGA INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • This stock's share value has moved by only 39.02% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The revenue fell significantly faster than the industry average of 27.3%. Since the same quarter one year prior, revenues fell by 12.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for ZYNGA INC is currently very high, coming in at 80.69%. Regardless of ZNGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZNGA's net profit margin of -32.30% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: ZNGA Ratings Report

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