Take Two acquires Zynga in the mobile gaming gold rush – The Average Joe

    Take Two acquires Zynga in the mobile gaming gold rush

    Victor Lei — Head of Research

    January 11, 2022


    January 11, 2022

    Gaming giant, Take-Two Interactive (NASDAQ:TTWO), is acquiring mobile game developer, Zynga (NASDAQ:ZNGA), for $12.7B — 64% higher than its previous day’s trading price.

    What’s the big deal? The mobile gaming industry is growing rapidly — and game makers are investing heavily into mobile gaming with large acquisitions.

    This deal is one of the largest gaming acquisitions in history — topping competitor acquisitions in recent years:

    • Tencent (OTC:TCEHY) acquired Supercell (Clash of Clans) for $8.6B in 2016.
    • Electronic Arts (NASDAQ:EA) acquired Glue Mobile for $2.1B in 2021.

    Take-Two — big in PC/console gaming — owns franchises like Grand Theft Auto, NBA2K and BioShock.Acquiring Zynga will give it a stronger position in mobile gaming.

    The Farmville history: Zynga — known for its FarmVille series — had a bumpy ride since going public in 2011.

    • The fall: Zynga heavily relied on Facebook in the beginning — which sent its stock down over 85% in 2012 after a Facebook platform update impacted sales.
    • The rise: In 2016, Zynga brought in a new CEO — who turned it profitable and expanded its gaming franchises beyond Farmville — to go on a 5-year bull run.

    Zynga received buy-out interest earlier this year — the rumors were indeed true. As its public chapter comes to an end, investors can turn to the many other gaming studios to bet on.

    Gaming stocks soared during COVID but most are down big since growth and COVID stocks peaked last February — with several mobile game stocks now looking cheap on many metrics.

    • Nexters (NASDAQ:GDEV) — one of Europe’s top 5 mobile game developers — is trading at a 12x P/E ratio — with 78% sales growth in its recent quarter.
    • Other mobile game developers: PLAYSTUDIOS (NASDAQ:MYPS), Skillz (NASDAQ:SKLZ) and Playtika (NASDAQ:PLTK).

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