Zynga Stock Declines on Weak Q1 Results

Social video game services developer Zynga Inc. (NASDAQ: ZNGA) has reported weaker-than-expected results for the first quarter ended March 31, 2022.

Following the weak results, shares of the company declined slightly to close at $7.65 in the extended trading session. The stock was trading 4.8% down during the day.

Revenue & Earnings

Revenues for the quarter came in at $691 million, up 1.6% year-over-year. A slight rise in online gaming revenues, from $534 million in the previous year to $537.7 million, contributed to the overall growth in revenues. Further, advertising revenues witnessed a year-over-year rise of 24.5% to $153.5 million. However, the overall topline figure failed to surpass the consensus estimate of $745.22 million.

The company reported a loss per share of $0.02 for the quarter, which remained unchanged from the previous year. Analysts had expected the company to post earnings of $0.09 per share.

Other Operating Metrics

The company reported quarterly bookings of $695 million, down 3% year-over-year. However, average mobile daily active users and average mobile monthly active users stood at 40 million (up 3% year-over-year) and 209 million (up 27% year-over-year), respectively.

Management Commentary

The CEO Zynga, Frank Gibeau, said, “We started off 2022 with a strong quarterly performance, achieving our highest ever Q1 advertising revenue and bookings led by our hyper-casual portfolio. Through continued execution across all aspects of our multi-year growth strategy including live services, new game development and investments in our advertising platform, new markets and technologies, we are strengthening our position as a leading mobile-first, free-to-play live services company.”

Stock Rating

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on three Buys and five Holds. ZNGA’s average price target of $9.92 implies that the stock has upside potential of 29% from current levels. Shares have declined 25.6% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Zynga’s performance this quarter.

According to the tool, the Zynga website recorded a 30.80% monthly fall in global visits in April, compared to March.

Zynga’s falling traffic on its website sequentially acted as a timely precursor to its weak quarterly results. This shows that TipRanks’ website traffic tool helps in making reliable predictions about a company’s performance.

Conclusion

Zynga’s muted topline growth contributed to the overall weak results of the company. However, a yearly rise in key metrics can be something on which the company may build a strong footing.

Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.

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