Needham Upgrades Zynga (ZNGA) From Hold to Buy

Needham upgraded Zynga from a Hold to a Buy on November 7th, 2014.   Shares of Zynga traded up nearly 3% on the day.  Needham has set a $3.25 price target on the stock which would represent a 30% upside from the current price of $2.43.

According To Needham

  • Q3 Metrics were lower than expected
  • Zynga’s bookings per paying user are encouraging

Zynga has been currently dealing with decling sales and concerns about its ability to develop new hit mobile games, however the results from Friday’s earnings call were very upbeat.

Technically Speaking

  • Zynga shares rose as high as 5% to $2.48 during Friday’s session
  • The company still reported a third quarter loss of a penny per share, but revenues were 3 million over projections
  • Zynga is trying to re-invent itself with more mobile game titles after the success with games on Facebook faded.

Our Take

Zynga may be a decent speculative stock or worthy of a trade if you’re trying to make a quick 10% or 20%, but long-term the business and business model are too sketchy for our taste at Financial Brawn.  If you want to get into mobile gaming, or gaming in-general, you’d be better off in GameStop (GME) which is currently trading at nearly 22% below it’s 12-month price target and is a much safer investment.

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