Zynga IPO offers plenty of upside, analyst says
Zynga IPO is priced at $10 a share, making the Internet social gaming company worth $7 billion. The Zynga IPO is scheduled for Friday.
One ‚ÄúFast Money‚ÄĚ analyst sounded positive on the highly anticipated¬†Zynga IPO, citing the company‚Äôs potential for growth.
¬†‚ÄúIt‚Äôs currently the leader in the social gaming space. It has 54 million daily active users, which is more than the next 14 game developers combined,‚ÄĚ said Stephanie Chang, research analyst at Renaissance Capital.
¬†Zynga, which priced shares at $10, will hold its initial public offering Friday under the symbol ZYNG. The initial share price will give the company a valuation of $7 billion.
Chang said Zynga would be able to avoid the trend of Internet and social media companies seeing a drop in their¬†post-IPO share prices, calling the ‚ÄúFarmville‚ÄĚ developer ‚Äúdistinguished‚ÄĚ from other game developers.
¬†‚ÄúZynga‚Äôs a completely different animal,‚ÄĚ she said.
¬†Chang said Zynga‚Äôs margin profile was significantly more attractive than a lot of other online companies. She also pointed to the company‚Äôs exposure to an estimated 3 percent of Internet users, which gave it potential advertising potential of $1.5 billion.
¬†‚ÄúThat‚Äôs a source of growth they haven‚Äôt even tapped into yet,‚ÄĚ she said.
¬†Chang‚Äôs position stood in contrast to a Sterne Agee analyst placing¬†a "sell" rating on Zynga¬†earlier this week.
¬†Either way, Stephen Weiss wasn‚Äôt tempted.
¬†‚ÄúI think the issue with all these IPOs right now is that there‚Äôs no investor loyalty, so the market gets a little rough and the first stocks that go are the ones they just bought, they really don‚Äôt know,‚ÄĚ he said.
¬†Weiss said it was difficult to know who planned to own the stock and who looked to flip it.
¬†‚ÄúI‚Äôm not going to buy the stock,‚ÄĚ he said. ‚ÄúI would wait until it trades down and finds a real shareholder base.‚ÄĚ