Zynga’s shares are down nearly 13 per cent today after the company reported a slight beat on earnings yesterday and a limited outlook for 2012.Now a slew of reports from analysts are throwing a little bit of caution on Zynga’s recent Cinderella run with its stock, which is up more than 40 per cent year-to-date.
Zynga reported its fourth-quarter earnings yesterday, which were more or less in-line with Wall Street expectations. Zynga delivered in-line results on bookings (about $307 million) and a slight beat on EPS ($0.05).
(You can find a full transcript of the earnings call on our story covering the company’s report.)
Its guidance for 2012 is light, and most of the performance is weighted toward the back end of the year, the company said.
Here’s the consensus from analysts:
- J.P. Morgan: $15, Overweight, citing performance of recent games like CastleVille and Hidden Chronicles and games in Zynga’s pipeline.
- Barclays: $12, Equal Weight, citing outperformance of comparable companies and recent stock performance.
- BMO Capital Markets: $10, Market Perform, saying the current valuation “more than adequately reflects the potential opportunity for the company.”
- Sterne Agee: $7, Underweight, saying “growth is slowing significantly” and the stock’s multiple is “likely unsustainable”.
- Evercore Partners: $10, Underweight, saying “results were not compelling enough to cause us to materially reassess our valuation or investment conclusion on the stock”
Some highlights from the earnings call:
- Zynga reiterated that it is interested in online gambling. “It’s a very interesting opportunity because we are uniquely positioned,” COO John Schappert said on the call. We have said before that online gambling represents at least a $1 billion market to Zynga.
- Pincus’ management style is still a question mark. When asked directly about reports on his management style, Pincus pointed analysts and those on the call to recent interviews with him. “My values, Zynga’s values are on the wall here,” he said.
- Mobile daily active users (DAUs) are up nearly 5x. The company now has 15 million active daily players on its mobile games, like Words With Friends.
- Mafia Wars 2 was a flop, while Hidden Chronicles has been a surprise success. It came in below expectations and didn’t “resonate” with users, Schappert said. But Hidden Chronicles is a new genre that is attracting a bunch of new players.