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This article first appeared on Simply Wall St News.
When the pandemic hit in 2020, online entertainment accelerated. Even if Zynga Inc. (NASDAQ: ZNGA) was already doing well, at least on the charts, it quickly reversed the decline and continued to set new all-time highs.
Sadly, that hasn’t been long lasting as it has been on a downward spiral for the past few months after it failed to shine on the last few earnings reports.
In this article, we’ll discuss the latest developments and where the stock could potentially go from there.
Latest developments
After Apple lost the skirmish with Epic Games, a California judge ruled in favor of game developers who can now bypass the Apple App Store. The move can certainly favor game companies like Zynga, but it could potentially come at the expense of independent developers if Apple decides to charge for registration in app stores.
Meanwhile, the company has just made new announcements. First, he announced that ReVamp, a new multiplayer social deception game, will soon be launching exclusively for Snapchat. Social deception games have grown in popularity after the astronomical success of cross-platform play ” Among us. “
Second, the company has unveiled a trailer for its upcoming free-to-play game, Star Wars: Hunters. You can watch the trailer here.
Check out our latest review for Zynga
What is Zynga worth?
According to our discounted cash flow (DCF) model, the company is currently undervalued.
We came to this conclusion after calculating the present value of future cash flows and coming up with the following equation:
Present value of terminal value (PVTV) = TV / (1 + r) 10 = US $ 21 billion รท (1 + 7.1%) 10 = US $ 11 billion
Compared to the current share price of US $ 8, the company seems relatively undervalued to a 43% discount . You can read the full DCF analysis on our news blog.
What does Zynga’s future look like?
Future prospects are an important aspect when buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a large business with a solid outlook for a low price is always a good investment, so let’s take a look at the future expectations of the business as well.
In Zynga’s case, its revenue is expected to grow 35% over the next several years, indicating a very optimistic future. If an expense doesn’t grow at the same rate or more, that revenue growth should lead to more robust cash flow, fueling higher share value.
What this means for you:
If you own stocks, don’t be surprised if things get worse before you start to improve. If you are a potential buyer, take note of the latest products and assess the potential – if you like them, chances are the large market will think the same.
In light of this, if you want to do more analysis on the business, it is essential to be aware of the risks involved. At Simply Wall St, we found 1 warning sign for Zynga , and we think they deserve your attention.
If you’re no longer interested in Zynga, you can use our free platform to view our list of over 50 other high growth stocks.
Simply Wall St analyst Stjepan Kalinic and Simply Wall St do not have positions in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material.
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