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As a manager I am experienced in resource planning, financial statements analysis, budgeting, hedging foreign currency exposures, leveraging, extensive ratio analysis/forecasting, all financial metrics and Greeks, LBOs, M&As, corporate taxes, accounting, MACRS, annuities, liabilities management,... More
  • ZNGA Calls  0 comments
    Dec 26, 2012 1:41 AM | about stocks: ZNGA

    ZNGA calls look just about ready for accumulation. Friday's Fiscal Cliff indecision selloff pushed tech down heavy and was able to force ZNGA below its 50 day Moving Average (see chart below); but unlike previous punctures below the 50 day SMA, a subsequent "freak out" selloff did not occur. On the contrary, serious support at $2.30 (another of the higher lows from the recent bottom) seemed to be established and reaffirmed with consolidation on the Christmas Eve half day. While recently cutting expenditures and re-establishing its partnership with Facebook, Zynga looks poised to turn a profit and see some decent valuation based on future earnings expectations. Currently, net cash for the company is around $1.5 billion and market cap at about $1.8 billion which makes most of ZNGA stock value in its cash which makes me think the stock is undervalued. The more time that goes by and no new lows are established for ZNGA, and no more upper management shake-ups occur, the better the possibility that ZNGA could break $3 and take a shot towards its December 2011 IPO price of $10. Its recently increased freedom from Facebook and escape from Facebook Currency will give Zynga the chance to make some cash especially as it steps into the online gaming realm in the U.K (Q1 2013) and as Nevada hopefully signs off on Zynga's gaming license. Either way, Zynga should continue to innovate in Silicon Valley despite its recent flight of talent and serious management shake-ups (Farmville 3? lol). As political indecision subsides and investors who were scared off by potential capital gains law changes push their inflated money back on the table in January, small caps will likely see a nice rally and ZNGA is along for the ride! Bernanke will continue to do his QE nonsense, and big money seeking risk exposure should help the "January effect". With all that said it looks like ZNGA should be able to pierce the 50 day MA again with a little hopeful excitement by traders and see a little resistance at the 20 day MA. That little pop to test the 20 however should give ZNGA call options a chance to bump up a bit. I am happy with 10% and the JUNE 22, $2.50 strike going for $.40 can offer that pretty easily and should be achievable this week. we'll see.. :) -Happy Trading!

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    Disclosure: I am long ZNGA.

    Stocks: ZNGA
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