Monday, April 21, 2014

Why Zynga Shares Zoomed Again

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of social game developer Zynga (NASDAQ: ZNGA  ) popped 10% today on continued optimism over its recent CEO shuffle.  

So what: The stock jumped yesterday after Zynga tapped Don Mattrick, president of Microsoft's Interactive Entertainment Business, as its new CEO, so the ongoing rally suggests that the move might be a real turning point for the beleaguered company. Of course, former CEO Mark Pincus -- who founded Zynga in 2007 -- will remain chairman and continue to own a controlling stake in the company, so there's still plenty of uncertainty over how much operating room Mattrick will actually have. 

Now what: I'd expect the stock to keep rallying in the short run. "I joined Zynga because I believe that Mark's pioneering vision and mission to connect the world through games is just getting started," said Mattrick in a statement. "Zynga is a great business that has yet to realize its full potential." Of course, when you consider the worrisome trends -- rapidly declining users and increasing competition -- that Mattrick now faces, I'd be cautious about buying into that long-term bullishness.   

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