Zynga Inc (NASDAQ:ZNGA)’s Irish arm (Zynga Game Ireland Ltd) posted bleak revenues, according to a filing with the Companies Office. The company posted a profit of $1.34 million on revenue of $355.7 million, a drop of $155.9 million for the 12 months ended in December.
Irish arm vital for Zynga
For 2013, Zynga Inc’s Irish arm posted a pre tax-profit of $1.34 million after incurring a loss of $50.7 million in 2012, which was attributed to the impairments of investments and tangible assets. The subsidiary, which was established in 2010, contributed 41% of the corporation’s worldwide revenue of $873 million in 2013. The corporate tax paid by the Irish unit totaled $380,345.
Zynga is a dominant force in social gaming, and more than a billion people have played the company’s games, which include Farmville, Zynga Poker and Words with Friends. Primarily, Zynga offers its games over social networking sites, and a chunk of its revenue come from the sale of virtual goods to players. According to the directors of the company, many of its titles start losing popularity after gaining maximum popularity and player usage. Zynga launched its IPO in 2011 at a share price of $10 and currently is trading at around $2.94.
What experts think of Zynga
Zynga shares were subjected to rating by number of analyst firms recently. Zacks analysts downgraded the stock from Outperform to Neutral in a research note to the investors on Sept. 8. They have assigned a price target of $3.30 per share to the stock. Wedbush analysts lowered their price target for Zynga from $7 to $6 in a research note on Aug. 8. Separately, analysts at Benchmark Co. also lowered their price target on the company’s shares from $3.08 to $2.83 in a research note to investors on Aug. 8. Zynga presently has a consensus rating of Hold.
Zynga’s revenues are declining quarter after quarter, but even then the stock is posing a compelling take for speculators, says a report from Seeking Alpha by George Kesarios. One of the most significant factors that can give some push to Zynga shares is revenue growth, which is the most important metric for a game-making company.
“Even if Zynga’s revenue fell to $20 million per quarter, but it managed not to lose money (as it is currently not), there are limits to how low this stock can go,” he wrote.
If Zynga shares drop another 20%, then it might become a stock for speculators to watch.