Zynga A Little Too Reliant on ‘Whales,’ Says Analyst
By John Letzing
Wall Street Journal
January 6, 2012, 1:32 PM
Macquarie analyst Ben Schachter sounded almost apologetic today in slapping a neutral rating on Zynga.
Schachter says he’s bullish on video games moving online, so his lukewarm rating on the only publicly traded pure-play online video game company may seem odd.
However, “recent revenue and margin trends, valuation, a limited operating history, competition, and revenue concentration are keeping us on the sidelines,” he writes.
In particular, he says only a relatively small fraction of the company’s 150 million monthly users actually pay for anything, making Zynga dependent upon a limited group of high-spending “whales.”
Zynga was recently down 2.6% to $8.68.
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