Shares of mobile gaming maker Zynga (NASDAQ:ZNGA) were one of the most-watched penny stocks in technology. But in only six months, shares climbed out of penny stocks territory, and now the company is no longer considered “small-cap.” With a market cap of $5.74 billion and Zynga stock currently selling for $6.10, this is a success story quite unlike others in its field.
Zynga Stock Climb
Since the beginning of 2019, Zynga stock has grown 53%. Now, the company’s current share price nears its five-year high of $6.19 hit in May. The astronomical growth in 2019 is attributed to increasing revenues, successful games, and clever acquisitions.
The latter, in particular, brought a hugely successful game into Zynga’s hands, and there’s no denying the impact this has had on the company’s fundamentals. Because in May 2018, Zynga acquired Merge Dragons founder Gram Games for $250 million USD.
Merge Dragons has been a huge asset to the company. It has outperformed expectations and represents 18% of Zynga’s online bookings revenue in Q1. Further, bookings for the title alone grew 64% in the quarter, having shown the same demand in Q4 2018. Alongside this game, the company also maintains a steady fanbase for its Empires & Puzzles game.
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Only one year on from that initial acquisition, Zynga is now expecting revenues of $1.24 billion in 2019.
This figure shows a steady upward trend; Zynga brought in revenue of $907 million in 2018, and $861 million in 2017.
Ad Revenue
Zynga stock is also reaping the benefits of increasing ad revenue. With one popular game, the potential to advertise to its millions of players is another massive revenue driver. And Zynga, in particular, has recorded robust advertising revenue in recent months.
While the mobile gaming industry is a crowded and therefore tough sector to operate in. Finding a key market separates the stocks worthy of investment and those that are not. Zynga has certainly found that for now, and shares are soaring because of it.
If the game company can supply another killer game to keep the attention of its users, then this company may continue to double in 2020 and onwards.
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