It’s Game Over for Zynga Inc (ZNGA): Time to Restart

The bottom line

Zynga appears to be at a crossroads, with the social gaming industry proving ever tougher as the mobile shift takes course while at the same time the company is attempting real money gaming, which according to Ceasars’ income statement leaves a lot to be desired. Additionally, the fact that Europe seems the most reliable source of income for real money gaming, taking into consideration that Ceasars has already built its nest in the region, poses a huge challenge to Zynga. However, the restructuring process will definitely allow the company to cut on spending, hence giving it the opportunity to take on the challenges as they emerge. The huge gross margin TTM coupled with a 0% operating margin signifies high operating costs against declining revenues, which justifies the layoff.

The bottom line is if Zynga is to negotiate a way out of the current situation, then it will have to reinvent itself by embracing the changes in social gaming. It is game over for Zynga, and it definitely has to start again.

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

The article It’s Game Over for Zynga: Time to Restart originally appeared on Fool.com and is written by Nicholas Kitonyi.

Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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