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  • ZNGA: Trading Near Book Value + Addition Of Online Gaming Executive = Potential Upside 3 comments
    Sep 19, 2012 2:58 AM | about stocks: ZNGA

    Zinga's recent addition of a former online-gambling executive along with a low price/book ratio means ZNGA has considerable room to move upwards.

    According to Morningstar, ZNGA currently has a price/book ratio of 1.3. A book value of 1.0 would indicate a stock is trading at a price that is equal to what that company's assets are worth on a per share basis, or about $2.37 in Zinga's case. So, this stock is trading down near the value of all their assets. That's pretty significant when you consider that the industry p/br average is 3.6 and the S&P 500 average 2.1. If ZNGA were trading at those ratios, the stock would be trading at $4.98 to $8.53 per share.

    Obviously, trying to speculate on what online gaming will do for Zinga's bottom line is anyone's guess but it does lead one to believe that Zinga has plans for growth. Whether you choose to consider this upside potential or not, it appears Zinga is currently undervalued in the market.

    Disclosure: I am long ZNGA.

    Additional disclosure: I also plan to add more shares to my position in the next 72 hours.

    Stocks: ZNGA
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Comments (3)
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  • Robert Anders
    , contributor
    Comments (30) | Send Message
     
    its zynga
    25 Sep 2012, 12:16 PM Reply Like
  • butterflypeter
    , contributor
    Comments (42) | Send Message
     
    i think zynga is a winner
    1.6 bill cash in the bank
    they could trade at the current levels for years without touchong their bank cash
    farmville 2 seems to be indicating a hit at the monet judging by dau and maus
    board of all their hit titles in the shops here in uk cananda and america this month with big sales expected for xmas
    the ad revenue doubled last quarter last results top 40 mill
    and the online gambling move a big positive if they get licences\
    what i would like to see is ome of the lawsuits dropped or settlements out of court
    this would be a huge swing for the sp
    3 Oct 2012, 11:41 AM Reply Like
  • vegassatellite
    , contributor
    Comments (6) | Send Message
     
    Author’s reply » Check out the DEC Puts on ZNGA. The $2.50 put would be a great one to write at the current $0.41 premium. If you get exercised, you will open a position on ZNGA at $2.09 (you already got the $0.41 premium). If the option doesn't get exercised, you still capture the premium of $0.41 per share.
    10 Oct 2012, 01:03 PM Reply Like
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