PPR - ZNGA- an interesting story

Published : March 1 2012 at 18:15 ET

ZNGA provides a platform for internet gamers via social networks, mobile platforms, as well as on its own website www.zynga.com. It accounted for 12% of facebook's $3.7 billion revenue stream in 2011. As of 9/11, it had 227 mil average monthly active users. Sales acceleration has been massive but earnings have been erratic.

Also, the price/volume pattern is unorthodox. It gapped down on big volume the day it opened after it came in with a conservative forecast for the first half of 2012. That said, it has since broken out of a defective pattern to new highs.

If favorable regulatory changes occur in the US, this would bode very well for ZNGA which aims to blend real-money gambling with social games. The implications are potentially massive.

All this is to say the company has a compelling story with impressive metrics.

Position size carefully since the price/volume pattern is questionable, and the company is an IPO on the thinner side.

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