Zynga Inc (ZNGA) Earnings Preview: Strategy Game

Zynga Inc (NASDAQ:ZNGA) will release its earnings report for the three months ended September 30 on October 24. After months of confusion and extremely poor performance, analysts are expecting the company’s numbers to flatten out this time around. All that will leave are questions about how the company is going to return value to shareholders.

Zynga Inc (ZNGA) Earnings Preview: Strategy Game

Analysts are expecting Zynga Inc (NASDAQ:ZNGA) to show a loss of around 4 cents per share. Revenue is expected to come in at around $188 million. In the same period of last year the company broke even and brought in revenue of $317 million. What happened last year isn’t all that important to Zynga, however.

Zynga hits bottom

Investors in the games company will be hoping that today’s numbers represent the bottom for the firm. Zynga Inc (NASDAQ:ZNGA) revenue is only expected to decline by a small margin between the third and fourth quarters, a sign that the company may have hit its revenue bottom. The firm’s share price is trading far above its bottom, however.

At $3.54 per share Zynag Inc (NASDAQ:ZNGA) stock is more expensive than it was for most of the period when the company was considering entering the gambling market. The company is valued at $2.85 billion at that price, a big number for a company that hasn’t made a decent profit since 2011.

Zynga Inc (NASDAQ:ZNGA) is in big trouble despite what the 50% gains in the company’s shares this year seem to indicate. The company is not able to make a profit and social gaming is dying. The company has given up on gambling, and there seems only one market, and one man, that can save Zynga.

Zynga strategy

An earnings preview report on Zynga Inc (NASDAQ:ZNGA) from Canaccord analyst Michael Graham put the idea very simply, “we believe investors are eager to hear any strategy thoughts new CEO Don Mattrick may have, and a well-articulated plan may alone be enough to help the stock.”

Zynga Inc (NASDAQ:ZNGA) doesn’t need to do anything flashy in its earnings report, what it needs is for management to pitch a business model to investors. Numbers are falling across the board, and sentiments like “mobile is the future of gaming” do little to convince investors. Zynga needs to show investors it has a plan, if it does the company’s shares might jump.