ZNGA has dropped by nearly 50% since its 52-week high
Zynga Inc. (NASDAQ:ZNGA) is an interactive entertainment company with reach in more than 175 countries and regions. ZNGA has a diverse portfolio of popular game franchises that have been downloaded more than four billion times on mobile. Additionally, Zynga owns Chartboost which is a mobile advertising and monetization platform. ZNGA closed its last day of 2021 at $6.40.
ZNGA and Forte, a developer of blockchain solutions for game publishers, announced on December 21 that the two companies have formed a strategic alliance to promote and pursue the opportunities in the blockchain games market. This will include leveraging Zynga’s intellectual property, brand, and community to develop blockchain-centric games.
Zynga stock has decreased about 34% year-over-year and has shed 47% since peaking at $12.32 in mid-February. However, shares of ZNGA are still up 18% after just falling to a bottom of $5.57 earlier this month.
Fundamentally speaking, the entertainment stock offers an intriguing valuation and growth rate. Zynga stock currently trades at price-sales ratio of 2.49, which is a great value considering ZNGA's high revenue growth in recent years. Zynga has increased its revenues 38% since fiscal 2020 and a whopping 200% since fiscal 2018. In addition, ZNGA's revenues are expected to grow another 11% in 2022.
Moreover, Zynga has a manageable balance sheet with $1.34 billion in cash and $1.49 billion in total debt, allowing the brand to continue expanding in the short-term without having to put a great focus on its net income. Zynga stock also has a forward price-earnings ratio of 18.59, which signals an expected growth in earning and represents a strong value for a growth company.
With all this said, now might be a good opportunity to speculate on Zynga stock with options. The security sports a Schaeffer's Volatility Index (SVI) of 41% which sits in the relatively low volatility 12th percentile of its annual range. In other words, options traders' volatility expectations aren't that high at the moment.