According to the statement made by BofA Securities, Zynga‘s higher-than-expected earnings in the first quarter of 2021 and its acquisition of popular advertising technology company Chartboost for $250 million seem to be sufficient reasons to become a shareholder of Zynga.
Analyst Ryan Gee bought his stake for mobile game maker Zynga last week, raising his target price from $12 to $13.50. Zynga’s shares closed at $10.71 last Thursday, which is an increase of 5.6%.
Effects of Zynga and Chartboost combination
Gee stated in an anecdote that he told his customers that Zynga’s acquisition of San Francisco-based Chartboost company caused a major change in the company’s strategy. Currently, Zynga is known for publishing mobile games. Analyst Ryan Gee did not mislead his customers by guessing that this was the first step in the plan to turn the business into a mobile advertising center.
Chartboost’s development, a mobile advertising platform that reaches more than 700 million monthly users, attracted a great deal of attention from Zynga. Zynga’s acquisition of Chartboost is predicted to save Zynga between 20 million and 30 million by 2022. In addition, Gee highlighted that Zynga’s return to the high-growth and high-margin advertising technology business is moving faster and more positively than expected.
Due to the profit margin it brings in stocks, Zynga is a very popular and popular stock on Wall Street. An example of this is that Zynga’s stock price increased by 8% in the two trading days after the results were announced, with the financial results being seen positively by the market.
Zynga shares look bright for the future
Zynga said last Wednesday that first-quarter earnings were much higher than expected. Zynga’s CEO, Frank Gibeau, also drew attention to his company’s acquisition of Rollic and the success of the Harry Potter game.
Gee states that the company was affected by the short-term expectations, that the company had less profit than expected in the second quarter and the company suffered some losses due to the late release of the planned project. But next year, the company is expected to benefit from scaling its games and ads. According to the reports released, Zynga shares increased by approximately 40% last year, while the S&P index rose by 46%.