Zynga’s (NASDAQ:ZNGA) IPO in mid-December looked like a big dud. The stock immediately plunged from $10 to $8 within a few weeks. But so far this year, Zynga has been a good game for investors. The stock hit $14.33 in today’s trading
One reason for the mega-spike was speculation Zynga might move into online gambling (although, it looks like that will take quite awhile). There was also some excitement from a deal with Hasbro (NYSE:HAS). And of course, the Facebook IPO was a big factor.
But were the expectations too enthusiastic? Based on Zynga’s earnings report since becoming a public company, released after the bell on Tuesday, the answer is no.
Revenue increased by 59% to $311.2 million, which beat the Wall Street consensus of $307 million. Bookings were also up 26% to $306.5 million. These will essentially turn into revenues over the coming quarters.
Adjusted earnings came in at 5 cents per share, which was another beat. Wall Street was looking for 3 cents. However, after running up nearly 7% in Tuesday’s trading, Zynga shares reversed course and gave back nearly 6% immediately after the earnings release.
But there’s no denying that Zynga had a productive year as it launched 12 games. It has also been getting traction with its mobile offerings, such as with Dream Zoo, Words with Friends and Zynga Poker. They were on the top-10 list in terms of revenues from the Apple (NASDAQ:AAPL) app store.
However, to remain competitive, Zynga continues to invest heavily. For example, EBITDA fell 34% to $67.8 million. But with about $1.92 billion in the bank, Zynga certainly has enough cash on hand to pursue its opportunities.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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