What to Expect From Zynga Earnings

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Zynga Inc. (NASDAQ: ZNGA) is scheduled to report its fourth-quarter financial results after the markets close on Wednesday. The consensus estimates from Thomson Reuters call for no earnings per share on $178.67 million in revenue. In the same period of the previous year, the company posted no earnings per share on revenue of $182.35 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. Its market cap is just around $2 billion, with no way to justify the amount based on sales and earnings. Its revenue in the most recently reported quarter was $196 million, up from $175.5 million in the same quarter a year ago. At this time, average daily active users totaled 19 million, down 21% from last year and 9% sequentially, while average monthly active users totaled 75 million, down 27% from the same period in the previous year and down 9% sequentially. Zynga has still been unable to replace its original wildly successful product FarmVille.

Prior to the earnings report, a few analysts weighed in on Zynga:

  • Wedbush reiterated an Outperform rating with a $5.50 price target.
  • Robert Baird reiterated a Hold rating.
  • Jefferies reiterated a Buy rating with a $5.00.

So far in 2016, Zynga has underperformed the broad markets, with the stock down 24%. However, over the past 52 weeks the stock is down only 26%.

Shares of Zynga were trading up 4.9% at $2.13 Wednesday morning, with a consensus analyst price target of $3.21 and a 52-week trading range of $1.93 to $3.13.