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Analyst: Stock Market Values Zynga At Below Zero

J.P. Morgan analyst Doug Anmuth recently stated that Zynga's market capitalization, about $1.87 billion at the time of this writing, has fallen below the total value "of the cash it has on hand, the securities it owns, and the amount it paid in March for its San Francisco headquarters." At the end of June, Zynga's total assets were value at about $2.7 billion, which means that the market values Zynga's actual business at below zero.

A report published by the LA Times cited additional negative analyst notes, one of which raised the concern of "significant" layoffs in the coming months. At this time, it appears that Zynga has lost all investor confidence and will need a major turnaround to regain the trust it once had.

That turnaround may not come soon enough, as the company announced last week that it expects to report a net loss of between $90 million and $105 million for the fourth quarter, mainly due to a $85 million to $95 write-down on the Draw Something acquisition. Zynga also lowered its full-year outlook to revenues of $1.085 billion to $1.100 billion, down from $1.150 billion to $1.225 billion. The shortfall was attributed to delays of "several" games as well as "reduced expectations for certain web games including The Ville."

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  • esrever
    $0 is how much I value zyanga, glad to see someone agrees.
    Reply
  • zomow
    Over-hyped stock is over-hyped.
    Reply
  • mikenygmail
    Wrong, the stock market values ZNGA at $2.45 per share.
    That's the current price right now in after hours.
    You could buy it for $2.46 per share, or sell it for $2.44 per share.

    If we are to believe the analyst, then ZNGA would be an easy short.
    Things are rarely that easy in the stock market, which is heavily manipulated.
    Reply
  • grimworld
    Who's to blame? People can only tolorate so so many "ville" games. Be creative for once
    Reply
  • aftcomet
    mikenygmailWrong, the stock market values ZNGA at $2.45 per share.That's the current price right now in after hours. You could buy it for $2.46 per share, or sell it for $2.44 per share.If we are to believe the analyst, then ZNGA would be an easy short.Things are rarely that easy in the stock market, which is heavily manipulated.
    Exactly. Jokes aside if this stock were valued below zero I'd go get 10 mortgages and buy it because there is an extreme inefficiency in the market and I want to cash in.

    I hate Zynga but from a business perspective, if you can generate money from fools by churning out trash games that are simply reskinned (Angry Birds -> Angry Pigs), then why not?
    Reply
  • raytseng
    i'm not sure if people misread the article are actually trying to make some odd point.

    yes headline is misleading, but article explains that their "business" is valued at zero, or negative.

    So YES, you go take out a $1.87billion loan, buy every share of zynga. Then if you can liquidate all the office equipment and other physical stuff for it's amortized value, and get someone to takeover your lease(s) on the buildings with no time gap, then YES you break even.
    (of course this is making the assumption they don't have poison pills to prevent a takeover, and every share is for sale).

    But yea, that is exactly how I read the article.

    What the valuation is saying is that the analysts believe the direction of the company is currently to just burn and lose more value and money.
    Reply
  • aftcomet
    raytsengi'm not sure if people misread the article are actually trying to make some odd point.yes headline is misleading, but article explains that their "business" is valued at zero, or negative.So YES, you go take out a $1.87billion loan, buy every share of zynga. Then if you can liquidate all the office equipment and other physical stuff for it's amortized value, and get someone to takeover your lease(s) on the buildings with no time gap, then YES you break even. (of course this is making the assumption they don't have poison pills to prevent a takeover, and every share is for sale). But yea, that is exactly how I read the article.What the valuation is saying is that the analysts believe the direction of the company is currently to just burn and lose more value and money.
    If I could buy their company for 1.87B and they have assets valued at 2.7B then I'd be doing a lot more than breaking even.
    Reply
  • raytseng
    lol, although the assets of 2.7B was in June. If they have full time employees shoveling cash just straight into the fire for the past 4months, that might have turned out better.
    Reply
  • stingstang
    At this point my dad would tell me (if I invested stock in the company) "Just keep you money in there. The stock will go back up."
    ...I really hate him.
    Reply
  • A Bad Day
    stingstangAt this point my dad would tell me (if I invested stock in the company) "Just keep you money in there. The stock will go back up."...I really hate him.
    One of my parent's friends invested in Enron back when the stock price was in the high 80s.

    How sour they were...
    Reply