Can Zynga Inc (ZNGA) Recover & Make You Money In The Process?

Looking ahead

Zynga may not be as diversified in the digital content world as its peers; however it’s growing quite fast as suggested by the record gaming activity claimed by Facebook in its recent quarterly results. It has been constantly adding new games to its offerings. The launch of Zynga with Friends last year hints at Zynga trying to venture into its own social gaming network. It recently launched a new game called Zynga slots which topped the list of the fastest growing Facebook Inc (NASDAQ:FB) games calculated by monthly average users. Moreover, Zynga has another big hit in the app store with the launch of the sequel to Draw Something.

The company is in a re-organization phase, closing down unpopular games and focusing more on high-growth areas like mobile gaming. The strong balance sheet suggests that even if the social gaming business slows down in the future, Zynga will remain intact and weather the storm with sufficient cash in hand. Zynga Inc (NASDAQ:ZNGA) has a cash component of $1.28 billion which can be utilized in acquiring any upcoming Internet start-up. The acquisition of Game of Thrones is a sign of diversification of revenue streams and open minded management by the company.

Conclusion

If Zynga makes it big in the gambling business, it can trade much higher from current levels. I personally have faith in the fundamentals of the company which will deter it from any unwarranted outcome. The gaming industry is a hits-driven business and developers constantly need to test and release newer versions and betas of exciting games. And Zynga, with its technical expertise, can certainly provide that. I predict a strong upside potential in the company, which makes the stock a buy at current levels.

Tanya Kanodia has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard.