Zynga's Red Hot IPO Could Set Gaming Stocks on Fire

May 25, 2011 3:55 PM ETRENN, MEET, MSFT, GLUU, PTE, GLOFF4 Comments
Mark Gomes profile picture
Mark Gomes

Hot IPOs can have a significant impact on the valuation of existing public companies. For example, the recent Renren (RENN) and LinkedIn (LNKD) IPOs proved to be a boon for Quepasa (QSPA) shareholders. In the days leading up to RENN's IPO, QPSA shares nearly doubled. A few weeks later, on the day of LNKD's IPO, QPSA shares rose as much as 34%.

In the coming days, Zynga, a leading social/mobile gaming vendor, is expected to file paperwork to go public. Judging by its last round of funding, its IPO could result in a $10 billion valuation. As was the case for QPSA, the media frenzy surrounding Zynga's IPO could send shares of publicly-traded social/mobile gaming vendors soaring.

Among them are Glu Mobile (GLUU), Gameloft (OTCPK:GLOFF), Majesco Entertainment (COOL), and RealNetworks (RWNK).

Glu Mobile has already been making headway on the strength of hot games like Contract Killer, Gun Bros, Deer Hunter, and Big Time Gangsta. Its stock should also benefit from its likely addition to the Russell 2000 next month.

Gameloft (OTCPK:GLOFF) is based in Paris, but that hasn't stopped the company from succeeding in the U.S. market. It boasts hot new titles like Order & Choas Online and Fast Five, leveraging the movie's box office success.

Majesco has been moving into the social/mobile space and has a close tie to Zynga, with its upcoming game, Parking Wars 2. Based on the A&E TV series, Parking Wars 2 is the second installment of the hit Facebook game. It is being developed by Area/Code, which was acquired by Zynga in January. The game is currently in beta-testing. If the game looks like a big enough hit, Zynga could present COOL with an attractive offer to keep it for itself. Given Zynga's larger audience, a deal could greatly benefit both sides. Either

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Mark Gomes profile picture
***NOTE: This account is no longer active due to a violation of Seeking Alpha's Terms of Use *** Mark Gomes is an Information Technology expert with over 20 years of experience. During his career, Gomes led the investment research efforts at numerous IT consulting organizations, including International Data Corporation (1994-1998), and AMR Research (1998-2004), which was later acquired Gartner Group. In 2004, Mr. Gomes founded Pipeline Data, LLC where he provided investment consulting to many of America's most well-respected mutual fund and hedge fund managers. In 2008, Mr. Gomes semi-retired and began donating his research to Seeking Alpha. He quickly built a reputation for accurately identifying inflection points and M&A candidates. Outside of the investment world, Gomes is a Masters Track & Field World Champion and multi-time world record holder. In 2012, he published "Faster Than Forty", which detailed his diet, lifestyle, and training techniques.

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