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Zynga: Institutional Investors Now Own More Than 82%

Robert F. Abbott profile picture
Robert F. Abbott


  • Zynga develops, markets, and distributes social games played on mobile platforms. Players may play for free; the company earns revenue by selling virtual currency to the players and by exposing.
  • The company lost money in 2020 and expects another loss this year, although not so deep. It has grown revenue, but its net margins are low.
  • At the end of 2020, it was owned by 555 institutional investors, who held the lion’s share of outstanding shares. Several insiders also continue to own significant stakes as well.

The shares of Zynga, Inc. (ZNGA), a company that's all about playing games, have been swallowed up by serious, professional investors.

Institutional investors, the professionals who buy and sell on behalf of pension funds, mutual funds, and the like, developed new-found enthusiasm for Zynga in the third quarter of 2019:

Zynga institutional ownershipSource: GuruFocus

According to GuruFocus, institutional investors owned just 47.13% at the beginning of the third quarter and then jumped right in, driving their share of ownership to 82.44%. The Vanguard Group alone owns than a billion dollars' worth of shares.

As this 5-year chart shows, Zynga's share price rose more than five-fold between 2016 and 2021, from $2.15 to more than $11.00.

Why this increasing interest, and why do these professional investors continue to hold a company that is posting losses rather than earnings?

What is Zynga?

Zynga games illustrationSource: Q4-2020 Financial Results Presentation

It described itself this way in the introduction to its 10-K for 2020,

"a leading provider of social game services. We develop, market and operate social games as live services played on mobile platforms, such as Apple's iOS and Google's Android, social networking platforms, such as Facebook and Snapchat, Personal Computers, consoles, such as Nintendo's Switch game console, and other platforms. Generally, all of our games are free to play, and we generate substantially all of our revenue through the sale of in-game virtual items ("online game revenue") and advertising services ("advertising revenue")."

More specifically, revenue comes from:

  • Virtual Items: This, the company's main revenue source, comes from the sale of in-game virtual currency; players use this currency to buy virtual goods (they can also earn virtual currency by gameplay or accepting promotional offers from advertisers).
  • Advertising: Players may play for free, but in doing so they must watch advertisements. Responsible for about 16% of revenue in 2020.
ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

This article was written by

Robert F. Abbott profile picture
Robert F. Abbott has been investing his family’s accounts since 1995, and in 2010 added options, mainly covered calls and collars with long stocks. He is a freelance writer, and his projects include a website that provides information for new and intermediate-level mutual fund investors. A resident of Airdrie, Alberta, Canada, Robert has earned Bachelor of Arts and Master of Business Administration (MBA) degrees.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ZNGA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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