Zynga Inc. (NASDAQ: ZNGA) is scheduled to report its third-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for a net loss of $0.01 per share on $169.94 million in revenue. In the same period of the previous year, the company posted a net loss of $0.01 per share on revenue of $175.49 million.
This company is one of the lost children of the Web 2.0 Internet IPO surge that never created a strong business model. While this stock has fallen this year, it does not appear that the plunge is over. It does not recommend itself as a turnaround, nor does it have anything to turn with.
Investors can claim Zynga never had a business, beyond the games it could sell on Facebook. Once that relationship began to deteriorate, the company lost its claim to future success and became nothing more than an experiment with products looking for a means of distribution. Zynga’s shares trade between $2 and $3, down from nearly $6 some 20 months ago. Its market cap is $2.3 billion, with no way to justify the amount based on sales and earnings. Its revenue in the most recently reported quarter was $199 million, up from $152 million in the same quarter a year ago. Daily average users of its games were 21 million, down 23% year over year. Zynga has been unable to replace its original wildly successful product Farmville.
Ahead of earnings a few analysts weighed in on Zynga:
- Wedbush reiterated a Buy rating with a $6 price target.
- Pacific Crest reiterated an Equal Weight rating.
- Goldman Sachs reiterated a Neutral rating with a $3 price target.
So far in 2015, Zynga has underperformed the broad markets, with the stock down 10%. However, over the past 52-weeks the stock is down only 6%.
Shares of Zynga were trading up 3.4% at $2.47 on Tuesday, with a consensus analyst price target of $3.26 and a 52-week trading range of $2.20 to $3.13.
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