Zynga Inc (ZNGA)’s Effective Execution Makes It A Good Turnaround Play

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Zynga Inc (NASDAQ:ZNGA) shares have declined about 10% since March 24. But the company got a very good start into 2014 as it reported better than expected results. Zynga is expected to report impressive first quarter results on Wednesday, April 23, which has caused the upward trend in the stock over the past few days. IAEResearch says that the online gaming company is still cheap despite last week’s rally. The company management has taken strong steps to grow its business.

Zynga is making progress in mobile category

Zynga Inc (NASDAQ:ZNGA) relied heavily on Facebook Inc (NASDAQ:FB) in the past. The San Francisco-based company has also been criticized heavily over its inability to penetrate the mobile segment. However, Don Mattrick is aggressively making progress in the mobile category. The $527 million purchase of NaturalMotion has enhanced its mobile portfolio substantially. It also adds variety to some of Zynga’s offerings. What’s more, the company has released its wildly popular title Farmville 2 for smartphones, and it doesn’t require integration with Facebook. 

The launch of Farmville 2 on mobile is a major step in the right direction. It will help the company build a larger presence in the mobile space. The mobile version allows players to play the game in offline mode. Players can also transfer goods from the Facebook Inc (NASDAQ:FB) version. The launch of Farmville 2 on mobile was well-received by Wall Street. IAEResearch says that about 75% of Zynga Inc (NASDAQ:ZNGA)’s upcoming games will be for mobile devices. In the next few months, the company is likely to unveil the mobile versions of Words With Friends and Zynga Poker, which is one of the most important titles for the company in terms of monetization.

Zynga’s liquidation value is around $2.85 per share

IAEResearch says the liquidation value for Zynga Inc (NASDAQ:ZNGA) is around $2.85 per share, suggesting a downside risk of 36%. But the company is now in a much better position to grow as it has started showing growth in the mobile category. The online gaming company’s strategy is paying off. The launch of Zynga Poker and Words With Friends for mobile should only strengthen its position.

Zynga Inc (NASDAQ:ZNGA) shares fell 2.08% to $4.47 at 2:43 PM EDT on Wednesday.

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