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  • Zynga And The Teenage Lifecycle 0 comments
    Nov 12, 2013 11:16 PM | about stocks: ZNGA

    When looking at the stages that Zynga has gone through, it is easily compared to the lifecycle of a teenager. In the beginning, Zynga was all hype, they had their entire life in front of them to succeed (or screw up in Zynga's case).

    They started as a regular high school student who just got their driver's license. They had a bank roll supplied by mom and dad and a seemingly endless supply of money to spend as recklessly as any normal teenager. The items money was spent on is also strikingly similar to most teenagers. Most of their money was going to video games (OMGPop) and beer (offices lavishly stocked with 10 varieties of beer and countless snacks and meals). At this point, most of the cashflow was outward with little to no return. Although they had some small successes providing extra funds to the company, this was about as useful as taking a part-time job to pay for college. It helps, but in the end it will not cover the expenses incurred during college life. With bills starting to add up, Zynga (like any college student) is starting to realize that this lifestyle can no longer be supported because the bank account is no longer being refilled by mom and dad.

    Now a senior in college, Zynga is starting to learn from their mistakes of wildly spending money and get a handle on being in charge of their own finances. They started by hiring Mattrick to be their counselor, but counselors alone cannot make or break a students future. Around this time, the college student is also doing some testing in what industry they really want to focus their degree on. Zynga, similarly, is/was looking into real money gambling to see if that's the road they want to pursue in the future. This is where we start to see the division between the individual college student and the collective of college graduates we call Zynga.

    Hopefully by this time most college students have had some interviews and gotten their foot in the door at a company providing a steady income. Zynga has not reached this point. Zynga has yet to find a steady path to follow and continues to live off their savings provided by mom and dad. Considering this savings is over $1 billion, they seem to be in little rush to move on from the college life to bigger and better things. And in theory, they could continue this lifestyle and live at home until they are 40 years old. Unfortunately, this does not help the people investing in Zynga's future.

    After giving up the luxurious life of catered meals, beer on tap, bad habits (OMGPop), and paying for their girlfriends' apartments in Boston and Austin, Zynga is looking to turn their life around. They need to focus on their strengths and forget all the distractions if they really want to make something of themselves. Hopefully Zynga can get back on the lifecycle of the college graduate. They should be able to manage this for one main reason. A college graduate with $80,000 in debt waiting for them and an entry level job can pay off their loans, start a family, and live a comfortable life. Zynga, with a over a billion in cash, a team of college graduates, and executives with years of business experience, should be able to be accomplish much more than this yet they cannot. If they continue to fail at this task that graduates fulfill year after year, then they should probably turn all that cash towards investment. Although not preferable, it would be a lot more beneficial to the company and their investors. They may not be the next Google, but maybe they should get back to the basics of car washing and newspaper delivery and get their heads straight to look toward the future and turn around this company for the better.

    This article was written based on my opinion and is meant to be a satirical review of a company facing typical problems of any college student. It may contain forward looking statements that are also based on my opinion.

    Themes: Mobile Gaming Stocks: ZNGA
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