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QQQ   265.39 (+0.47%)
AAPL   108.22 (+1.03%)
MSFT   203.19 (+1.30%)
FB   249.53 (+0.20%)
GOOGL   1,422.86 (+0.96%)
AMZN   3,019.79 (+0.66%)
NVDA   493.92 (+1.85%)
TSLA   387.79 (+1.95%)
BABA   269.73 (-1.18%)
CGC   14.27 (-2.26%)
GE   6.06 (-0.82%)
MU   49.47 (-0.76%)
AMD   75.82 (+1.46%)
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BAC   23.34 (+0.34%)
BA   146.05 (-3.39%)
S&P 500   3,246.59 (+0.30%)
DOW   26,815.44 (+0.20%)
QQQ   265.39 (+0.47%)
AAPL   108.22 (+1.03%)
MSFT   203.19 (+1.30%)
FB   249.53 (+0.20%)
GOOGL   1,422.86 (+0.96%)
AMZN   3,019.79 (+0.66%)
NVDA   493.92 (+1.85%)
TSLA   387.79 (+1.95%)
BABA   269.73 (-1.18%)
CGC   14.27 (-2.26%)
GE   6.06 (-0.82%)
MU   49.47 (-0.76%)
AMD   75.82 (+1.46%)
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QQQ   265.39 (+0.47%)
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GOOGL   1,422.86 (+0.96%)
AMZN   3,019.79 (+0.66%)
NVDA   493.92 (+1.85%)
TSLA   387.79 (+1.95%)
BABA   269.73 (-1.18%)
CGC   14.27 (-2.26%)
GE   6.06 (-0.82%)
MU   49.47 (-0.76%)
AMD   75.82 (+1.46%)
T   28.04 (+0.61%)
F   6.66 (+0.30%)
ACB   5.20 (+0.58%)
GILD   62.25 (-1.33%)
NFLX   473.08 (+0.52%)
DIS   122.49 (-0.64%)
BAC   23.34 (+0.34%)
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Zinga (NASDAQ: ZNGA) Stock Topping Out as Restart Narrative Emerges

Wednesday, August 12, 2020 | Jea Yu
Zinga (NASDAQ: ZNGA) Stock Topping Out as Restart Narrative EmergesMobile videogame producer Zinga (NASDAQ: ZNGA) shares have benefit from the pandemic induced stay-at-home isolation mandates, but the economic restarts have caused shares to top out. Despite strong topline growth, Zinga shares are diverging with the rising S&P 500 index (NYSEARCA: SPY).. As consumers return to work, they will have less time to engage with mobile gaming. Investors should consider unwinding profits and trimming positions at rebound levels as the return to normalcy narrative may continue to drive prices lower.

Q2 FY 2020 Earnings Release

On Aug. 5, 2020, Zinga released its second-quarter fiscal 2020 results for the quarter ending June 2020. The Company reported a loss of (-$0.16) per share versus consensus analyst estimates for a profit of $0.07 per share, missing estimates by (-$0.23) per share. Revenues surged 47.4% year-over-year (YoY) to $451.69 million beating analyst estimates by $434.09 million. The Company issued downside earnings guidance of (-$0.15) per share versus consensus estimates for a profit of $0.09 per share. The Company also lowered full-year guidance for a loss of (-$0.54) per shares versus a profit of $0.35 per share but raises full-year revenue forecasts to a range of $1.8 billion versus analyst forecasts of $1.86 billion. Zinga also announced the acquisition of mobile hyper-casual game producer Rollic.

The Company noted the recent acquisition of Peak added two top-charting games, Toon Blast and Toy Blast, which have over 12 million mobile daily active users (DAU) and 26 million mobile active users (MAU). These popular games expand the Company’s “forever franchises” to eight. GAAP operating expenses surged to $161 million up 67% YoY driven by “higher contingent consideration expense, marketing investments and acquisition-related expenses.” The Company reported net losses of (-$150 million) due to higher contingent consideration expense. Seriously?

Rollic Acquisition

Zinga announced the acquisition of Istanbul-based Rollic for $168 million for 80% of the company with plans to acquire the remaining 20% in three equal valuation-based installments. Rollic is on track to reach $100 million in revenues on booking. The Rollic acquisition brings on board the top two most downloaded mobile games in Go Knots 3D and Tangle Master 3D entering Zinga into the hyper-casual market. These advertisement driven games to bring 5 million mobile DAUs and 65 million MAUs to Zinga. The Company has growth by acquisition of top games which has ended up diluting shares as the timing of acquisitions tend to be near the peak of popularity. This goes back to their $53.3 million acquisition of Words With Friends game maker New Toy in 2011 but eventually became a model for their forever franchises.

Lowered Guidance

Zinga expects gross margins to be down significantly YoY due to a higher net increase in deferred revenues and GAAP operating expenses to rise YoY. The Company also expects a net loss of (-$160 million) in Q3 2019 compared to net income of $230 million YoY, which came as a result of a one-time $314 million gain on the sale of their San Francisco building. In other words, they can’t seem to find a way to make money. Shareholders should take advantage of still elevated share prices to unwind positions while the market is still keeping shares elevated. 

Zinga (NASDAQ: ZNGA) Stock Topping Out as Restart Narrative Emerges

ZNGA Price Trajectories

Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for ZNGA stock. The monthly stochastic has peaked out after shares peaked off the $10.51 Fibonacci (fib) level.  The monthly 5-period moving average (MA) support sits at $9.01. If the stochastic slips the 80-band then a sell-off towards the 15-period MA at $7.22 and the weekly market structure low (MSL) buy trigger at $6.86 are the next legs down. The weekly stochastic formed a mini inverse pup to slip the 80-band stochastic through the 15-period MA. A reversion bounce back to the $9.42 fib is a prime opportunity to wind down positions. If the weekly stochastic continues an oscillation down, then the $8.88 fib and $8.25 fibs will be the final liquidity pocket supports to continue trimming down or keep stop losses. Traders can also watch competitor Glu Mobile (NASDAQ: GLUU) to gauge sentiment and direction for the mobile app video game producers. Glu also missed earnings bringing momentum to a sudden stop and reversal. Despite the impressive bump in revenues and bookings, the losses continue to mount as does the ambiguity and proliferation of quirky accounting terms (IE: contingent consideration expense?

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Glu Mobile (GLUU)1.7$7.40+0.5%N/A-105.70Buy$9.56
Zynga (ZNGA)1.4$8.85+1.7%N/A-295.00Buy$10.93
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7 Gun Stocks to Buy During the Coronavirus Pandemic

Socially conscious investors may want to stop reading. But the fact is that gun stocks were some of the best-performing stocks at the onset of the coronavirus pandemic. And they continue their positive momentum.

Some of that may be historical. Firearms sales tend to increase during an election year. But of course, this has not started out as a normal election year.

In March, the nation was gripped by pictures of long lines outside gun stores in several U.S. states. The website Ammo.com reported that bullet sales increased by 222% in the period from February 23 through March 15 as opposed to the first three weeks in February.

And according to the Federal Bureau of Investigation’s (FBI) National Instant Criminal Background Check System (NICS), there was a 73% year-over-year increase in background checks in February.

“The world has never seen anything like this and people want to make sure they're prepared for whatever lies ahead, whether that be food shortages, government shutdown, or worse," a spokesperson for Ammo.com said in an emailed statement. "When everything around you is uncertain, having a supply of ammunition can make our customers feel safer."

Given the likelihood of increased firearms sales, we’ve created this presentation that highlights seven gun stocks that you should consider for your portfolio.

View the "7 Gun Stocks to Buy During the Coronavirus Pandemic".

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