Zynga Shares Drop After Profit Forecast Falls Short of Estimates
(Bloomberg) -- Zynga Inc. shares fell as much as 5.5% in late trading after the video-game company’s forecast for fourth-quarter profit fell short of analysts’ expectations.
- Zynga projects adjusted fourth-quarter revenue will increase to $670 million, according to a statement. That’s above analysts’ estimates of $654.6 million. The video-game publisher also predicts adjusted profit of $135 million, below Wall Street’s average of $136.4 million, according to Bloomberg data. For the just-ended third quarter, revenue and profit both exceeded estimates.
- See more details.
- Video-game play, especially on mobile devices, has exploded this year, with millions of people staying at home because of the coronavirus pandemic. Zynga is a big beneficiary, with fourth-quarter revenue expected to increase more than 50% from a year earlier. The company said Wednesday it’s still seeing more play and monetization because of Covid-19 lockdowns.
- “Expectations aren’t something we control,” Chief Executive Officer Frank Gibeau said in an interview. “It’s really been a crazy year, and we’ve managed it as good as could be expected.” Still, he said, “it’s probably going to be a very digital Christmas, with a lot of gift cards given, and that should be a benefit for digital services and products.”
- The company continues to look for acquisitions on the heels of its recent purchases of Rollic and Peak.
- Apple Inc.’s new iPhone 12 could provide a boost to Zynga, thanks to new features such as 5G wireless connectivity, which allows for faster download of game. The phone will allow for more complex games and let more gamers play at once.
- Zynga slumped as low as $9.33 in extended trading after the results came out. The stock had rallied 60% this year through the close Wednesday in New York
- Read the statement.
- See Bloomberg estimates here.
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