Zynga Shares Going Crazy Again; Stock Up 15%
Shares of recent internet gaming IPO Zynga (NASDAQ: ZNGA) are soaring again on Friday after rising more than 16% on Thursday. At last check the stock was up better than 15% to $14.16. Volume is extremely heavy in the name with more than 27 million ZNGA shares already trading hands compared to a 3-month daily average of around 11.5 million. The activity in the stock comes on the heels of Facebook filing documents for a $5 billion IPO which could give the company a valuation of as much as $100 billion.
In the filing documents, Facebook revealed that Zynga accounts for roughly 12% of its revenues. Using the metrics provided by Facebook, some analysts have suggested that Zynga, which went public last December, may be undervalued. In just the last 5 trading days, however, ZNGA shares have rallied 40% and the move in the stock could be getting overdone.
Piper Jaffray (NYSE: PJC), for example, is one of the brokers which has suggested that Facebook's IPO filing reflected very positively on Znyga, yet the firm only has a $11 price target on the shares. With the stock jumping from the mid $10 range to above $14 in the course of two days, do not be surprised if shares experience a sharp pullback as early as next week.
