Why Star Wars Could Save Zynga

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Zynga Inc. (NASADQ: ZNGA) shares rocketed up on Wednesday after the company announced that it had entered into a multiyear licensing agreement with Walt Disney Co. (NYSE: DIS) to develop and publish a new Star Wars mobile game, with the option for a second game.

The specific financial terms of the deal were not released.

As part of the agreement, Zynga’s NaturalMotion will also assume operation of the live service of “Star Wars: Commander,” a free-to-play real-time strategy game developed by Disney that was launched in 2014. NaturalMotion was originally purchased back in 2014 for a grand total of $527 million, and now it finally gets put to good use.

Zynga has been stuck in a trading range between $2 and $4 for a long time now. And it looks like the company could very well break out of this range with the help of Star Wars. If Zynga proves successful with this game, it easily could keep rolling out the hits (at least one more) in its partnership with Disney.

Frank Gibeau, Zynga CEO, commented:

Star Wars is one of the most iconic franchises in the world and has engaged generations of fans for decades. As game makers and moviegoers, we’re huge fans of Star Wars and are excited to create new experiences for players that bring this beloved brand to life. We look forward to extending the reach of the Star Wars universe and developing a new mobile game that entertains players for years to come and has the potential to be a future forever franchise for Zynga.

Shares of Zynga were last seen up about 10% at $4.11, with a consensus analyst price target of $4.84 and a 52-week trading range of $3.20 to $4.57.

Disney traded at $112.63 a share, with a consensus price target of $119.34 and a 52-week range of $96.20 to $117.90.

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