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Zynga Inc (ZNGA), Facebook Inc (FB): How Online Gambling Could Save These Companies

It might be the right time for the developer. The company lost $121 million in its most recent quarter, a loss equal to $0.40 per share. Total revenue was down $6 million, with adjusted revenue up $4 million. For the full year, Electronic Arts Inc. (NASDAQ:EA) expects a loss of $0.98 per share, up from the $0.97 it predicted previously. Since the company’s digital strategy is currently its saving grace, it will likely continue to recognize its consumers’ gravitation toward mobile gaming.

Facebook wins

Unlike Google Play, which prohibits gambling apps, Zynga’s move in the U.K. made it clear that Facebook Inc (NASDAQ:FB) was willing to consider them. In the U.S., the social media giant has much to gain from accepting mobile apps into its store.

Although Facebook Inc (NASDAQ:FB) had a stellar second quarter, app install advertisements are a huge source of revenue for the company. An app install ad displays on a user’s newsfeed to encourage downloads. If gambling apps move forward, Facebook Inc (NASDAQ:FB) may benefit from the competition for consumer dollars.

Revenue for the social media site was up a full 53% to $1.81 billion, thanks largely to its increasing use of mobile ads. Revenue from these ads represented nearly half of all of the site’s advertising revenue for the quarter, a result of the company finally working out flaws in its ads as daily active usership continuing to climb. Analysts called it the best quarter the company has had since going public.

The average street estimate for 2013 is $0.57 per share, with Wall Street predicting $0.78 per share in 2014. A move toward online gambling could further cement its mobile advertising revenue stream, giving the company consistent earnings year after year.

While regulatory hurdles in America make mobile gambling difficult for developers, experts are predicting those restrictions may weaken. In fact, California, Nevada, and New Jersey are all considering altering their restrictions. Look for Zynga to eventually team up with Facebook Inc (NASDAQ:FB) to launch gambling apps as these restrictions change; even if the company chooses to keep gambling overseas, however, U.S. shareholders will benefit from their success.


Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook.
Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article How Online Gambling Could Save These Companies originally appeared on Fool.com is written by Stephanie Faris.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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