[Updated: 1/10/2022] Take-Two Zynga. to acquire
Take-Two Interactive (NASDAQ:TTWO) has announced its plans to acquire Zynga (NASDAQ:ZNGA) In a deal worth $12.7 billion. Zynga shareholders will receive $9.86 per share, which includes $3.50 in cash and $6.36 in Take-Two stock. This transaction represents a whopping 64% premium to Zynga’s current price of $6 per share.  We’ve long maintained our view that ZNGA stock is undervalued, seeing a decline of more than 37% over the past year, compared to a massive 23% increase for the broader S&P500.
Declining user engagement levels compared to the pandemic, and changes to Apple’s ad tracking policy are some of the reasons ZNGA stock was weighing down in recent quarters. Zynga has made several acquisitions in recent years and improved its revenue growth, a trend that is expected to continue. ZNGA’s share price is up more than 50% in after-hours trading. Our coverage on Zynga, including Zynga Revenue Comparison, Zynga Ebitda Comparison, And Zynga RatingProvides more details on the company’s financial performance, among others.
While ZNGA stock is likely to see higher levels today, it’s helpful to see how its peers stack up. check out Zynga Stock Comparison with Peers Click here to see how ZNGA stock compares against peers on count metrics. You can find more useful comparisons like this here peer comparison,
Below you’ll find our previous coverage of ZNGA stock where you can track our outlook over time.
[Updated: 12/7/2021] ZNGA Stock Updates
share price of Zynga (NASDAQ:ZNGA) The underperformance from its peers as well as the broader indices continues. While the S&P500 index has seen a 9% rise over the past six months, ZNGA stock is down more than 40%. Now, most gaming stocks, including TTWO and EA, have also underperformed the broader markets with negative returns of over 10% over the past six months, still outperforming ZNGA. ATVI stock is also down more than 40% in the past six months, but it has its own stock-specific issues, Overall, user engagement levels for gaming were much higher last year when people were confined to their homes, but now with economies opening up, engagement levels are lower than last year.
For Zynga, in our view, such a huge drop in the stock is unfair. What has affected ZNGA stock, in addition to declining user engagement levels, is increasing competition from the likes of Roblox, a gaming platform where users can play games developed by other users in the metaverse (refers to a virtual reality environment where users can interact with each other), and there are concerns over Apple’s policy on in-game advertising. Apple released a privacy update for iOS in April, making it difficult for the app to track iPhone users without their consent. This ad-tracking change is likely to result in higher player acquisition costs for Zynga.
That said, advertising growth of nearly 2x in Q3 2021, aided by Rollick’s over-due gaming portfolio acquisition, was better than estimates down the road. Management also raised its full-year outlook and has new game launches slated for Q4 and 2022, which, along with its Chartboost acquisition this year, is likely to fuel further bottom-line growth.
going by us Zynga’s rating Based on an expected EPS of $0.38 and a P/E multiplier of 27x, there is a potential for growth of over 60% from current levels of around $6, a little over $10. In fact, the $11 estimate, averaging analyst forecasts, represents an even higher 73% upward movement from current levels, clearly indicating that ZNGA stock is currently undervalued, and investors are currently declining. Can use this as a buying opportunity for strong gains. long term
But what about the near-term, given that ZNGA’s stock has seen a 12% drop in one month? According to its historical performance, there is ZNGA stock slightly more likely to decline in the next month. Out of 313 instances over the past ten years, ZNGA stock declined 12% or more in twenty-one days, 154 of them resulted in ZNGA stock rising in the subsequent one-month period (twenty-one trading days). This historical pattern represents 154 out of 313, or Only ZNGA stock likely to rise 49% in the coming month, View our analysis ZNGA Stock Growth Potential for more information.
Therefore, if it follows its historical pattern, ZNGA stock could remain sideways in the near term. However, given that the stock is undervalued with a huge upside potential, we still find current levels attractive.
Wonder how Zynga’s companions stack up. check out Zynga Stock Comparison with Peers Click here to see how ZNGA stock compares against peers on count metrics. You can find more useful comparisons like this here peer comparison,
[Updated: 9/22/2021] ZNGA stock decline
share price of Zynga (NASDAQ:ZNGA) It has seen a decline of 6.5% over the previous week, while it is down 22% year-on-year. ZNGA’s stock has seen a gradual decline since it reported sluggish Q2 results in early August. Despite the recent acquisition of Rollick, earnings were well below our estimates, and there are growing concerns if Zynga may see a meaningful earnings expansion in the coming years, which the company has delivered in the past. Furthermore, there are already signs of a slowing growth in user engagement levels after a sharp rise during the pandemic and the bottom line seen largely in gaming stocks in recent months.
Now, there are some positive developments for Zynga as well. Recently, a federal judge ruled that Apple cannot force developers to use in-app purchases.  Gaming developers, such as Zynga, will now be able to offer payment options other than Apple’s, which account for between 15-30% of gross sales. This will help gaming companies to improve their margins going forward.
The company also plans to launch FarmVille 3 for mobile, and it will result in better growth. Zynga’s Revenue Going forward, given the popularity of the franchise. The company will also launch its free-to-play Star Wars game, which is expected to boost its user base and in-game purchases. Zynga also announced Revamp, a social deception game for Snapchat.
If you are considering Zynga stock as an investment option over a larger time frame, you can explore our forecast Zynga’s rating, We retain our view that ZNGA stock is undervalued and any decline can be used as a buying opportunity for long-term investors. But what about the near term? Will ZNGA stock continue its downward trend in the coming weeks, or is a stock rise imminent?
According to the Trefis machine learning engine, which uses ten years of historical data to identify trends in a company’s stock price, ZNGA returns returns for the stock average. about -0.4% in the next after a period of one month (twenty one business days) is experiencing a decline of 6.5% compared to the previous week (five trading days), which means the stock is best avoided in the near term, But how would the returns be if you are interested in holding the ZNGA stock for short or long term? You can test the answer and many other combinations on the Trefis machine learning engine to test Zynga Stock Price Forecast, You can test your chances of recovery at different time intervals of a quarter, month, or even just 1 day!
Machine Learning Engine – Try it yourself:
If ZNGA stock moves by -5% over five trading days, ZNGA stock moves an average of 0.3% over the next twenty-one trading days, with only a 52% chance of a positive return over the period, based on the stock’s historical performance.
Some fun scenarios, FAQs and making sense of Zynga stock movement:
Question 1: Is the price forecast for Zynga stock higher after a drop?
Answer: Consider two situations,
Case 1: Zynga stock falls -5% or more in one week
Case 2: Zynga stock rises 5% or more in a week
Is the price forecast higher for Zynga stock in the month following Case 1 or Case 2?
Case 2. ZNGA stock fares better after, with an expected return of 0.2% over the next month (21 trading days) under Case 1 (where the stock has lost just 5% compared to the previous week), versus an expected return of 0.3% for Case 2. This shows a price forecast of $8 in Case 1 and a figure of $8 in Case 2 using the ZNGA market price of $7.66 as of 9/22/2021.
In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details Expected Return for the S&P 500 After Rise or Fall,
Try the Trefis machine learning engine above to see how Zynga stock’s forecast can turn after a specific profit or loss over a period.
Question 2: Does patience pay off?
Answer: If you buy and hold Zynga stock, over time hopefully the near-term volatility will cancel out, and the long-term positive trend will be in your favor — at least if the company is otherwise strong.
Overall, according to the data and calculations of the Trefis machine learning engine, patience absolutely pays off for most stocks!
For ZNGA stock, the returns over the next N days after a -5% change over the last five trading days along with the returns for the S&P500 are detailed in the table below:
You can try the engine out to see what this table looks like for Zynga after major losses in the past week, month or quarter.
Q3: If you wait a while what about the stock price forecast after the rise?
Answer: The expected return after a rise is much lower than after a fall as explained in the previous description…