Zynga (ZNGA) investors are skeptical of the company’s ability to grow their user base, even after the company announced a strategy that will allow users to access their games outside of Facebook. The fear is that competition will become a larger threat to the company’s future if they are unable to generate ideas that will bring in more users.
The company announced features that will allow users to access games outside of Facebook, which includes more mobile games and the company’s website. They are also attempting to make their games and tools more entertaining.
According to regulatory filings, more than 90% of Zynga’s revenues come from consumers playing games on Facebook. Investors fear that the company’s revenues are at risk with users slowly losing interest. Wedbush analyst Michael Pachter disagrees with investor sentiment, saying that he believes that the majority of gamers that will stop playing Zynga games will likely be users that don’t pay for the games. In addition, paying users will likely spend more as they invest more time in playing the games.
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Zynga investors believe that the future of the stock is being threatened with a decline in users, and in return, revenue. Analysts think that the company will continue to be a major player in the social games market.
Their success is dependent on their ability to retain their user base, monetize their usage, and grow the number of subscribers.
Use Kapitall tools to Zynga and their competitors. Will Zynga stay in the competition?
Interactive Chart: Press Play to compare changes in market cap for ZNGA, DNACF, and EA:
Interactive Chart: Use the Turbo Chart to compare the stock performance of ZNGA andEA against the performance of the S&P 500 Index (SPX):
(Written by Danny Guttridge)