|Written by GSCR Staff|
|Friday, 04 October 2013 09:20|
With all the ‘sky-is-falling’ doom and gloom from the media and politicians over the shut-down and looming default let’s end the week on a fun note.
Back in early February we highlighted Zynga, Inc. (NASDAQ – ZNGA - $3.67) as a great tech play and the stock is up nearly 36% since. The Company provides it’s online social games under the FarmVille, CityVille, FarmVille 2, ChefVille, CastleVille, Zynga Poker, Words With Friends, Scramble With Friends, Draw Something, Bubble Safari, Mafia Wars, Ayakashi, Horn, and Respawnables names that are available on Facebook (NASDAQ – FB) and other social networks.
We think it may be time to buy more ZNGA or at least hang on to the shares you have. Here are three lines of thought.
First, our 4Q13 formula checks out for the stock, almost. The technical analysis is very bullish for DMA all the way out to the 50-day duration. The 2014 EPS forecast is still in the red but closing in on 0 for 2014. However, the shares are trading at an astronomical volume averaging over 23 million shares per trading session over the last three months and a 24% rise in share price over the last month, which is a definite sign of accumulation.
Second, there is more and more buzz about the Twitter IPO, and ZNGA might be a great side play at cheap price. There was a great article in Market Watch last night worth reading.
Finally, and this is the ‘common sense’ part of the article. Late in the day yesterday, the Company announced it is seeking to raise an additional $1 billion through another IPO. In normal or old times this was definitely an indication or proxy that would signal a decrease in share price, simply a supply and demand dynamic. This is 2013 and we have seen share prices actually increase when this occurs. The logical explanation can be that the Street feels that the capital will help future growth, revenue, and earnings.
Look for a nice bump up to $4.50 by Thanksgiving.
Have a great weekend!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports.
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com