Zynga saw a meaningful surge in short interest last month with total interest coming in at 71 million shares as of Feb. 27, a growth of 3.1% from the Feb. 13 total of 68.9 million shares. Around 9.3% of the company’s shares were sold short.
Consensus rating of Hold
Recently a number of analysts have given their verdict on the game maker. Zacks analysts downgraded Zynga from an Outperform to a Neutral rating and assigned it a price target of $2.70 in a research note on Feb. 19. Piper Jaffray analysts have set a price target of $2.50 and assigned it a Hold rating in a research note to investors on Feb. 13. Benchmark Co. analysts dropped their price target on the game maker from $2.45 to $2.36 and assigned a Hold rating to the stock in a research note on Feb. 13. Zynga currently has an average rating of Hold and an average price target of $3.53.
For the most recent quarter, Zynga posted losses of 4 cents per share, which was in line with the analysts’ consensus estimate. Revenue for the game maker came in at $192.50 million, which was below the consensus estimate of $201.11 million but was up 9.1% from the same quarter last year.
Zynga through Porter Five Force model
Recently a report in Seeking Alpha by analysts at Trefis analyzed Zynga using the Porter Five Force model. The report noted that the game maker is experiencing declining users, losses and only a few titles released over the past year, so they concluded that the industry dynamics are not in favor of Zynga, suggesting a high level of threat.
Competition is big for Zynga and could potentially spike in the future due to low entry barriers in the mobile gaming industry. Customers will be in a better position to bargain as their expectations are on the rise. These factors will pressure the development and customer acquisition costs over the coming years, according to the report.
Zynga’s business relies heavily on suppliers of traffic such as Facebook, Google and Apple. Facebook in particular has more bargaining leverage as it stands strong as the key source of distribution, marketing, promoting and payments for Zynga’s games, noted the report.