Potential Left For Zynga ($ZNGA)?

avatar By: IS
Date posted: 07.04.2013 (3:00 am) | Write a Comment  (0 Comments)

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In general, I’ve not been a big believer in Zynga (ZNGA) and I can’t imagine a complete reversal taking place.  There are a few brighter signs though. I did discuss the potential of Poker and online gambling becoming legal and how Zynga would be very well positioned which is certainly one part of the story.

Zynga Made The Right Move

A few days ago, Zynga made a huge move by hiring Don Patrick. Who is he? He was heading the xBox group at Microsoft (MSFT). Needless to say that no matter what you think of Microsoft, it was a huge job in one of the star divisions of the Seattle based company.  To be clear, this is a very expensive option as Mr Patrick’s compensation could increase beyond $50M depending on how well things end up going. There had been doubts about founder Mark Pincus and his ability to lead Zynga to a successful recovery. This seems like exactly the type of move that was needed. Unsurprisingly, the stock rallied big time:

ZNGA

Do you think it’s too late to jump on the bandwagon? May I remind you of another “dead” tech company that hired a star CEO just a few months ago? When Yahoo (YHOO) hired Marissa Mayer? Look how things have gone since then:

YHOO

I’m starting to believe in the potential of going long Zynga. Again, as is the case for Yahoo, any turnaround will take a long time but if the market starts believing, it could be enough for a nice little gain

Disclosure: No position on Zynga (ZNGA)

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