Ad Potential Shows Promise By TipRanks
As a possible buy-the dip investment, Zynga (NASDAQ) may be worth considering. This company’s stock has dropped 32.9% over the past three months. This means that the stock is oversold.
Zynga operates a $300-million-per year mobile advertising company. ChartBoost was recently acquired by Zynga for $250million. TipRanks shows Zynga stock charts.
ChartBoost is just one of Zynga’s many big-budget acquisitions. ChartBoost’s core business is the monetization of mobile apps and websites. The company currently works with more than 500 app monetization and advertising customers.
ChartBoost increases Zynga’s total addressable market for advertising. Mobile advertising is expected to grow at 32.5% between 2018 and 2026, according to the industry. The market is estimated to reach $408.6 million by 2026.
ChartBoost could eventually bump Zynga’s mobile ads business to bring in $500 million a year. Zynga may generate $1 billion annually from advertising in two years.
ZNGA can be a great investment for the mobile advertising industry.
Zynga Deserves Higher Valuation
ZNGA has forward P/E valuation of only 16.2x. This is lower than Electronic Arts’ (EA) 19.3x. Zynga has been unfairly undervalued relative to other companies. Electronic Arts (NASDAQ:) has zero advertising business.
The mobile segment of EA (including its subsidiary Glu Mobile (NASDAQ:)) is still not as big as Zynga’s $699-million per quarter mobile game bookings. Zynga boasts more than 205 million active monthly players.
Zynga’s five-year revenue average growth is 24.5%. This stock is high in growth and has a low valuation.
The company’s financial health is excellent. Zynga’s total cash position is $1.5 million. The company has $1.32 trillion in long-term and short-term liabilities.
Wall Street’s Take
The consensus among Wall Street analysts is that ZNGA is a Strong Buy, based on 12 Buy recommendations. The average Zynga price target is $12.02, implying 64.9% upside potential.
Zynga does more than just offer mobile gaming. Because of the growing mobile advertising market, Zynga is worth investing in.
Disclosure: Motek Moyen had no position at the time this article was published.
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