Should Investors Buy The Dip In Zynga’s Stock Price?

One gaming company that has slipped under investors’ radars is Zynga, but perhaps now is the perfect time to buy this social gamer.

Aug. 9, 2021

Gaming companies are getting hammered right now, with investors fearing a slowdown in growth as the world attempts to move past COVID. 

The latest victim of this sentiment, despite impressive Q2 earnings, is Zynga Inc (NASDAQ: ZNGA).

Who is Zynga Inc?

You may not have heard of this San Francisco-based mobile and social networking company, but you’ve probably heard of some of their games, which include: ‘Farmville’, ‘Words With Friends’, ‘Game of Thrones Slots’, and more. 

The company posted impressive figures for Q2, including 59% year-over-year (YoY) growth in quarterly revenue and 37% growth in *bookings to $712 million — *the net amount of products and services sold digitally for real money, like in-game currency.

So why is Zynga down almost 20%?

Two reasons: 

  1. COVID-19 restrictions continue to loosen thanks to vaccination efforts, so investors believe that nobody will be staying inside playing games anymore. 
  2. Apple. Always Apple! More specifically, Apple’s troublesome little iOS 14 privacy update, which gives users control over what their third-party apps can and cannot track on mobile devices. 

To the latter point, Zynga addressed this problem directly by scaling back UA (user acquisition) spend due to higher costs, and refocusing on organic growth in new markets, an ad ecosystem, and in-house game development. 

In this renewed focus, which has worked well so far, Zynga is reducing its reliance on iOS data and could actually come out the other side stronger; a sentiment reinforced by its impressive Q2 numbers. When looking into gaming investments, it might be worth considering the above points.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here