Zynga Inc: Mobile Audience Growth Is Surely Encouraging

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Zynga Inc: Mobile Audience Growth Is Surely Encouraging

Zynga (NASDAQ:ZNGA) has not seen any substantial upside in its market valuation, which conveys that the company has to do a lot more to prove its worth to the investors. However, analysts at Trefis Team have a price estimate of $3.33 on Zynga, which represents an upside of 10% over the current price. The marginal upside in the stock is due to the company’s latest actions to increase its presence in the mobile devices.

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The report notes that the social gaming company has expanded its subscriber base on mobile platform in the recent quarters, which is a positive sign. Also, the mobile bookings are expected to grow beyond web bookings in 2014.

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Encouraging numbers for Zynga

The user engagement over desktop has declined because the mobile platform users have increased. Also, the casino franchisee is driving growth in user base for Zynga. Casino games can be played over and again unlike other games, which will serve well for Zynga in the long run, believe the analysts.

Zynga saw a surge of 10% in monthly user for the first quarter of 2014 and daily audiences grew approximately 7% over the fourth quarter of 2013. The increase comes as a positive surprise following the slothful growth in the last one year.  Mobile played a vital role in this growth as the company’s monthly mobile audience surged 45% sequentially over past one and a half-year, and daily user percentage rose 23%. Even though major growth was due to Zynga acquiring NaturalMotion, core Zynga mobile users, also, grew by double-digit sequentially.

Targeting 50% bookings from Mobile

Zynga is expecting that its mobile bookings will add more than 50% to the total bookings in 2014. During the first quarter, mobile bookings added 36%. The company will find a place in the club of other successful internet firms that earn most of their revenues from mobile platform if the target of 50% is achieved.

The social gaming company rolled over new version of its successful franchise Farmville for iPhone, iPad and Google Play indicating that the company is making sincere efforts to match the footsteps of big gaming companies on mobile platforms. Even though Zynga is in a late adapter category, it is making just the right choices, according to the team.

Mobile monetization has become vital for the companies as consumers are shifting predominantly towards smartphones and tablets for their computing and entertainment needs. Facebook (NASDAQ:FB) saw its share price up significantly after the company enhanced its mobile ad business. Pandora Media (NYSE:P), also, falls in the same category.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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