{"id":11113,"date":"2012-04-24T01:33:20","date_gmt":"2012-04-24T05:33:20","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=11113"},"modified":"2012-04-24T01:34:35","modified_gmt":"2012-04-24T05:34:35","slug":"time-to-buy-zynga","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/24\/time-to-buy-zynga\/","title":{"rendered":"Time to Buy Zynga Ahead of the Facebook IPO"},"content":{"rendered":"

(This is an excerpt from an article I originally published on Seeking Alpha on April 19, 2012. Click here to read the entire piece<\/a>.)<\/strong><\/p>\n

{snip}…selling in the stock is accelerating as Zynga wipes out all of its post-Facebook gains and retests its $10 IPO price. If Facebook is a $90B company, then Zynga’s 12% share of revenue should make it roughly an $11B company. This represents 50% upside from current levels, conveniently placing ZNGA right under its all-time intra-day high. This relative valuation is of course not gospel, but it serves as a good starting point for measuring Zynga’s upside potential from current levels.<\/p>\n

The chart below points out many of the interesting features of Zynga’s chart since its IPO – a lot has happened in 5 short months!<\/p>\n

Click image for larger view…<\/strong><\/em>
\n


\n
\"ZNGA<\/a>
ZNGA returns to its IPO price after an event-filled roundtrip<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

{snip}<\/p>\n

This downtrend began with ZNGA’s announcement of an $180 acquisition of mobile gaming company OMGPop<\/a>. {snip} The stock has been mostly downhill since then. A Bloomberg segment on April 17th talked about ZNGA’s desire to do similarly large acquisitions over the next few years<\/a>. This news seemed to accelerate the selling. Now, the stock has extended its distance from the downtrend line and rests at its IPO price.<\/p>\n


\n