For game developer Zynga's (ZNGA) shareholders, a sale
of part or whole of the company would be the best bet now, according to an
analysis done by Bloomberg.
The stock has lost about 70 percent of its value since
its IPO debut in December 2011 at $10 a share. Bloomberg data shows that the
shares of the company are trading at slightly more than one time its one-year
forward earnings, the worst valuation in the industry.
Zynga Chief Executive Mark Pincus had earlier remarked
that he would not consider a sale of the company. He controls slightly more
than half of the voting rights in the company.
Analysts are however of the opinion that a strategic
investor at this crucial juncture, would not only infuse fresh funds, it would
also mean a revival of sentiments among its investors who have been dumping the
stock over the last several months.
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Ironfire Capital LLC told Bloomberg that a sale now
cold fetch the company $7.30 a share. Compare that with the current rice of
about $3 a share.
A spokeswoman for the company told Bloomberg that the
company remained focussed on its sector and to its goal of creating the best
gaming products in the industry.
Zynga's tipping point came last month when its second
quarter results missed analyst forecasts and gave a bleak outlook for future
earnings. It drastically cut its earnings to between 4 and 9 cents a share from
the earlier 23 to 29 cents.
The game developer derived a significant portion of
its revenues from the games it developed for ally and partner Facebook. However
a change in the social network’s search metrics has made it difficult for users
to find Zynga's games and play them.
Three of its top games on the site, Farmville,
Cityville and Castleville have lost about a fifth of its players since the
first quarter of 2012.
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