If you search for penny stocks in gaming, you are likely to come across Zynga (NASDAQ:ZNGA). The company constantly wins the title of an investor ‘one to watch.’
But don’t be so quick to jump…
Penny Stocks in Gaming: Zynga Inc.
Looking at its performance over the past year, I call ZNGA a ‘Phoenix’ penny stock. Its chart shows a fluctuating trend where it consistently rises above $4 USD only to fall back to $3.20 or so, only to rise again a few weeks later. All the while, ZNGA never reaches the all-important $5 price point. So perhaps this penny stock is one to watch, but it needs to prove itself much more before you act.
Penny Stock Today
At its current selling price of $4.24 (down over 2% on the day), this penny stock could be hitting the high point of the trend once again. If so, prepare for the impending drop.
Start-Ups
Founded in 2007, Zynga went public in 2011 with a massive $7 billion valuation. But these shares never really took off as the potential behind them suggested. Today the market cap of Zynga is almost half that IPO value; $3.7 billion.
It began in the internet gaming sector, a space plagued with competition and highly vulnerable to the ever-changing winds of social media. This penny stock started declining almost as soon as it began trading.
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Radar
What is keeping Zynga on the radar is the transition it made from web-focused to mobile-first, all the while narrowing its gaming title focus. A result of this change is “streamlined operations, re-invigorated top-line growth, cut costs and improved profitability.”
Now investors are seeing numbers they can get on board with:
- Mobile revenue up 9% in Q3;
- Mobile bookings growth of 23% y-o-y;
- An audience of 22 million active daily users and 87 million monthly active users.
This penny stock could finally break the trend this year and soar passed $4.30, but it’s too early to tell, and there’s a lot more work to be done.
What do you think?
Featured Image: Depositphotos © AlexKv2
