Zynga (ZNGA) Stock Price and Forecast: Buy the rumour, buy the facts!

• Strong pipeline, strong results lead to a 20% gain in December.
• Gaming sector might be in play with market reports circulating.
• Technical chart turns bullish as ZNGA breaks out.

Zynga (ZNGA) is a San Francisco-based mobile games developer and is one of the largest social- games makers in the world. ZNGA games are made primarily for Apple iOS and Android operating systems. 

Zynga (ZNGA) is making headlines on Thursday as multiple news sources and traders circulate a TMT Finance report that Tencent (TCEHY) is considering finance for a large acquisition.

Zynga benefited from the coronavirus lockdown as games downloads increased. ZNGA became the number one games developer on both Android and Apple (AAPL) by August last year. Zynga’s revenue has increased from $767M in 2015 to $1.3billion in 2019 and results for 2020 continued to impress with earnings per share just ahead of analyst expectations for Q4 2020. 

While revenue for Q4 2020 was a new record for Zynga (ZNGA) it was slightly behind analyst expectations, but JPMorgan, Wells Fargo and Morgan Stanley all upgraded the stock in December. This helped ZNGA to a near 20% rise in December.

ZNGA stock outlook

ZNGA continues to grow its business and look for new opportunities as shown by the $1.8 billion acquisition of Peak earlier this year. ZNGA should see growth in emerging economies as the more smartphones globally, then the larger ZNGA’s potential market. The rollout of faster mobile speeds with 5G should also be a boost to Zynga (ZNGA).

Pipeline for future growth

Zynga announced at its last investor results presentation on November 4 that it has a multi-year pipeline of new games, sees further acquisition opportunities and raised its full-year 2020 revenue guidance by $129 million. 

ZNGA technical analysis

Zynga has broken out of the recent sideways trend with a break to the upside. The last major low of $9.35 keeps the uptrend in place and the break of old highs from July and August adds further strength to the bullish trend. MACD has crossed the signal line but the RSI has not yet broken out to confirm the new high in ZNGA share price, this needs to happen in the short term to confirm the bull trend. 

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