Zynga Hanging On for US Online Gambling
This week Zynga beat analyst expectations when it reported a profit of 1 cent per share. It was expected that a loss of 4 cents would be announced.
However, the stock still took an after-hours hit and dropped more than 10% to under $3 a share as investors were disappointed by a warning for the current quarter.
Another shock was that people are still playing FarmVille and Words With Friends. The company still has an impressive 253 million monthly. Essentially the company is trying to stay alive long enough to be able to enter the US online gambling market. While Zynga hasn’t said much about it, they have launched a UK online casino which many believe is a test for future US plans.
It seems that Zynga has a chance of making it, they currently have $1.65 billion in cash on the balance sheet. Furthermore Zynga has paid down long-term debt of $100 million this month.
It is an excellent balance sheet and shows the company’s determination to keep going. As long as they can hang on until the US gambling market opens up, then there is a good future for Zynga.