Zynga’s recent financial results for Q2 cause Wall Street analysts to lower expectations for the next three months.
Online gaming firm Zynga boasts an impressive gaming portfolio that has managed to achieve great success throughout the past several years. According to gambling news, currently the firm has posted that it has around $1.2 billion of cash on hand, which equals around $1.5 of the $2.88 stock price.
It is expected that in addition to other successful games, popular titles like Words with Friends and Farmville will generate somewhere in between $695 to $725 million. However, despite having such impressive numbers, the company has performed lower than initially predicted by financial experts.
Conservative approach leads to obscure messages
• Analysts predict modest performance in Q3 for Zynga
• Zynga recently signed deals with Tiger Woods and the NFL
• Insiders believe that by year’s end shares just pass $4 per share
Wall Street analysts believe that the next quarter will spell a mediocre success for Zynga, considering their earning levels in the last three months. The results show that the firm has broken even with $153 million in revenue, which suggests that the next quarter might generate earnings of $15-20 million. Costs on the other hand remain at the same level.
Some would disagree with their predictions as they didn’t take other business opportunities into consideration, like certain advertising revenue models and the way in mobile sales perform.
Analysts like to pass the messages set by CEOs of companies, which many times creates confusion and somewhat different viewpoints as to the performance of firms. Zynga’s current chief executive Don Mattrick is considered to maintain a conservative approach to business, often sending out relatively obscure and subjective signals.
Shortly after taking over the company, Mattrick and his team of highly skilled individuals released a statement highlighting their intention to stop their previous gambling license pursuit. At the same time they failed to clearly state that they would seek to establish Zynga Poker as a real money gaming platform.
This action will obviously make way for their mobile casino gambling ambitions in the future, as they look to become a serious force in that industry as well. Taking into account that that current online gaming industry is generating around $41.5 billion per year, it is easy to see why Zynga is pushing hard realize their aspirations in that arena.
Hidden potential in the company
The highest grossing markets for online gaming comes from Europe and Macau, while the addition of some US states will help take the revenue levels to the next level in the near future. Furthermore, speculation regarding the legalization of internet gaming from the American Indian Reservation land should also come as a welcome bonus.
Mattrick also missed out on mentioning the recent success with penning deals with the NFL and Tiger Woods. Although Woods has been struggling with form and injuries lately, his marketing potential is still considered to be massive in the modern environment. His popularity and earning power is beyond imagination making him a gen for any company.
The NFL bears the same effect as Tiger Woods. Electronic Arts’ Madden NFL game has grossed a staggering $4 billion in revenues over the past 25 years and still enjoys a huge stronghold in the market. The licensing deal with the NFL will spell out great success for Zynga as the football franchise will be used to develop numerous gaming platforms.
By evaluating the overall business pursuit of the firm, people can easily come to the conclusion that Zynga shares will relish in the future, despite what the analysts are predicting for the next quarter. Some online gambling sites in the US even believe that Zynga stock will once again jump up to and even surpass $4 per share by the end of the year.
The reasoning behind the positive future prospects is that Zynga holds numerous hidden elements of value that cannot be seen on the surface and is not reported by financial analysts. But instead, the firm must be closely observed to uncover the serious potential behind the initial forecasts.