ZNGA Stock: This Could Be a Big Deal for Zynga Inc

ZNGA StockThis Is Why I’m Bullish on ZNGA Stock

Zynga Inc (NASDAQ:ZNGA) must be doing something right because after facing difficulties with the launch of new products due to financial issues, Zynga stock has gained more than 15% in the past two weeks. As you will find out in this article, Zynga has a new tool to boost its fortune.

Until now, Zynga had few tools to improve its financial situation. The company could not invest in developing new products to challenge the growing competition.

Moreover, last March, just 11 months after his return as CEO, Zynga founder Mark Pincus resigned again. Frank Gibeau, who joined Zynga’s team of board members last summer, replaced him. Gibeau’s two decades of experience at Electronic Arts Inc. (NASDAQ:EA) has evidently helped steer Zynga in the right direction. Zynga stock is trading at around $2.85, a price level it has not reached since last year!

The question is this: can Zynga stock continue to climb? The answer is yes, indeed, it can.

The fact that Zynga has achieved a remarkable run on Wall Street just as Brexit uncertainty has taken down so many other stocks is a sign that investors like Zynga’s new direction. They are optimistic about Gibeau’s leadership. It’s no longer about restructuring and cost-cutting at Zynga, which is what Pincus had focused on until his departure.

Indeed, Zynga stock’s current price is still a whole world away from its 2011 initial public offering (IPO) value of about $10.00 per share, but the company seems to have found a viable business model.

Zynga stock’s rather lethargic performance actually began not so long after its IPO. In March 2012, Zynga shares started to go down and never fully recovered. But there is something already past the horizon and coming into full view that could spell a comeback. Indeed, this makes Zynga an interesting stock to investigate.

It all comes down to one game. When you’re in Zynga’s line of business, one game can make all the difference.

Zynga knows this better than most companies, given its success with “FarmVille.” The company’s new product is called “CSR Racing 2.” It is a follow-up to “CSR Racing” and so far, more than 190 million people have downloaded it to play on their “Android” or “iOS” devices. (Source: “NaturalMotion’s CSR Racing 2 Now Available Worldwide,” Zynga’s Official Blog, June 30, 2016.) By all accounts, CSR Racing 2 is an excellent effort, as the game got 4.5 out of five possible stars in all the venues that count. (Source: “CSR Racing 2 Review: Revved Up Again,” Gamezebo, June 30, 2016.)

The big novelty here is that Zynga has vastly improved its graphics content, which has moved the company into a new sphere. (Source: “CSR Racing 2 and Its ‘Beyond Console’ Graphics Launch on iOS and Android,” Venture Beat, June 30, 2016.)

The graphics are so good that Zynga expects the product to deliver a superior gaming experience to any of its rivals. “But,” you might be saying, “the game is free! How is it supposed to generate any money for Zynga and for me if it’s free?”

It just so happens that free games, or so-called “free-to-play” games, are how Zynga can win at the business game. You get users with the free app, then you sell those users all kinds of goods through advertising. This is a tired-and-true business method and it’s not Zynga’s first foray into the free-to-play gaming area. (Source: “Free-to-play iPhone Game ‘CSR Racing’ Is earnings $12 Million per Month,” The Verge, August 15, 2012.)

So, yes, if there is an upshot for Zynga stock, it is that this one free game has the potential to lift the company’s fortunes. It’s a big deal. The product could win over new users thanks to its intense use of graphics, which could spill over into other new products.

If Zynga stock starts to go down, products that had low market appeal may be to blame. The games that made Zynga’s initial fortune have saturated their appeal and Zynga needed something new. “CSR Racing 2” has arrived to serve as that “something new” and Zynga stock has certainly responded favorably already.