Zynga Inc
Zynga Inc (Nasdaq: ZNGA) develops and markets social games on mobile platforms. It also generates revenue from advertising services and mobile game downloads.
Investment Rationale – SPECULATIVE BUY at USD 10.08
Risk Assessments
Recent News
Acquisition: On 5 May 2021, Zynga acquired Chartboost (mobile programmatic advertising and monetization platform) for nearly US$250 million in cash.
Financial Highlights for the quarter ended 31 March 2021 (as on 5 May 2021)
(Source: Company Website)
Share Price Chart (Analysis done by Kalkine Group)
Valuation Methodology: EV/Sales Approach (FY21) (Illustrative)
Conclusion
Following the upbeat Q1 FY21 performance and Chartboost’s acquisition, Zynga is in a great position to increase the addressable market and generate a significant value for its shareholders. Moreover, the strength of live services portfolio, new game launches, strong momentum of the hyper-casual portfolio, and significant increase in DAUs shall help in achieving its long-term operating margin goals.
In terms of Q2 FY21 guidance, Zynga expects to report 49% year-on-year growth in revenue with 37% year-on-year growth in bookings.
(Source: Company Website)
The stock made a 52 week High and Low of USD 12.32 and USD 7.77, respectively. On the technical chart, the next important support level is at USD 8.27.
Based on the decent trading momentum, Chartboost’s acquisition, revenue and booking guidance, with support from valuation conducted above, we have given a “SPECULATIVE BUY” stance on Zynga Inc at the current price of USD 10.08 (as on 16 June 2021, at 9:55 AM ET), with a lower double-digit upside potential based 4.33x EV/Sales (approx.) on FY21E Sales (approx.).
Hexo Corp
Hexo Corp (NYSE: HEXO) is a consumer-packaged goods cannabis entity in Canada with global ambitions.
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