Zynga Inc (ZNGA) Just Pulled a Complete Bait-and-Switch on Investors

Still, if investors are buying Zynga today, I have no idea what they’re going off of. Until Mattrick articulates his ideas for the future of Zynga, there isn’t a story from which to consider an investment.

The move to mobile

The one thing Zynga Inc (NASDAQ:ZNGA) has going for it is that it’s a big developer on a growing platform. Social and mobile gaming have continued to explode in popularity, while other traditional forms of gaming (console, PC) have remained relatively stagnant.

Activision Blizzard, Inc. (NASDAQ:ATVI) has unquestionably been a better stock to own than Zynga in recent years, but given the trends in the gaming sector, that might not always be the case.

Activision Blizzard, Inc. (NASDAQ:ATVI) has stuck with the classic gaming paradigm, dominating the consoles with titles like Call of Duty, and remaining a key player in the PC gaming industry with hits like World of Warcraft and Starcraft. As recently as May, CEO Bobby Kotick downplayed mobile, saying that there just wasn’t anything there yet to draw Activision in.

But with Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) rumored to be working on some form of gaming consoles, the mobile platform could become increasingly important in the coming years. If Android and iOS dominate the living rooms of gamers, companies familiar with that platform (like Zynga) may have the edge over companies that do not (like Activision Blizzard, Inc. (NASDAQ:ATVI)).

Investing in Zynga

Now that the bull case for Zynga Inc (NASDAQ:ZNGA) has been squashed, it’s difficult to see a real argument for Zynga, at least in the near-term. If new CEO Don Mattrick can put forth a convincing turnaround plan, investors could reassess the company.

Certainly, Zynga could have a bright future under better management. Social gaming continues to grow, as evidenced by Facebook’s recent quarter. If Mattrick can capitalize on that trend, Zynga could be a great turnaround story. But until then, investors should stay away.

The article Zynga Just Pulled a Complete Bait-and-Switch on Investors originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Facebook. The Motley Fool owns shares of Activision Blizzard and Facebook. Salvatore “Sam” 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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