Recently, SAC Capital, led by Steven A. Cohen, increased its
stake in video-game publisher
) to approximately 5.3%. This almost doubles SAC's stake in
Zynga, which stood at 2.0% at the end of 2013.
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Zynga is a renowned game developer with popular games such as
Farmville, Words with Friends, and Draw Something in its kitty.
The company has had a rough time since it went public at the end
of 2011, including multiple rounds of layoffs, ill-considered
acquisitions, and a soured relationship with
However, it is worth noting that SAC's decision to raise its
stake in Zynga comes at a time when the social game developer has
had a bearish week. It has tumbled approximately 8.7% since the
disappointing Initial Public Offering (IPO) of competitor
), which dampened the bullish outlook of the social gaming
At the end of 2013, SAC Capital owned just 15.8 million shares of
Zynga but now that the firm has raised its stake, it has edged
out Vanguard Capital (with a 5.1 % stake as of Dec 2013) as the
game maker's largest shareholder.
In 2011, Zynga debuted at $10.00 but now trades at $4.42. The
decline in share price can be attributed to its failure to
respond to a market shift towards games played on smartphones.
However, over the past twelve months, Zynga's shares have surged
39.9%. Zynga has been trying to boost its competitive position in
the mobile gaming segment through the launch of mobile games for
) iOS platform. Zynga also posted better-than-expected third
Although, increased competition from the likes of Electronic Arts
remains a major headwind going forward, we believe that Zynga's
innovative product pipeline and its dominant position in the
social and gaming sector will help it in achieving robust growth
in the near term.
Currently, Zynga has a Zacks Rank # 1 (Strong Buy).