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Zynga, Caesars Gain on Online Gaming

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Shares of social media gaming company Zynga (NASDAQ: ZNGA) and Caesars Entertainment (NASDAQ: CZR) gapped higher on Monday after online gambling legislation was approved in Nevada. New Jersey is widely anticipated to follow suit.

Shares of Zynga have been beaten down since the company's IPO. The popularity of its once widely successful Facebook (NASDAQ: FB) games (such as Farmville) has diminished to some extent in recent months. Zynga went public about one year ago, and shares initially traded at $10 before rallying as high as $15. Yet, shares have fallen to as low as $2.09 in recent weeks.

However, rather than double down on its social media efforts, Zynga has begun to take steps to set itself up for online gaming. The company hired Maytal Olsha back in September. Olsha came from 888 Holdings, a popular online gambling website headquartered in Gibraltar.

Evidently, traders expect the company to be able to make a successful transition, as shares of Zynga rallied over 15% Monday.

As for Caesars, the Casino heavyweight might be uniquely poised to cash in on the trend. John Paulson, legendary hedge fund manager, made a bullish case for Caesars back in May of 2012. Paulson argued that the company was well posistioned to capitalize on online gaming. Shares of Caesars were up nearly 7% Monday.

Of course, the trade is still somewhat risky. Even with online gaming legalized in Nevada, U.S. citizens in other states may be barred from playing, at least for the time being.

Posted-In: News Hedge Funds Legal Intraday Update Movers Tech Trading Ideas General Best of Benzinga

 

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