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Zynga: Disappointing Deal Value


  • Zynga agrees to be bought by Take-Two Interactive at a disappointing valuation despite the deal premium.
  • The new entity proposes a company rivaling EA trading at a major discount to the gaming giant.
  • The new Take-Two will have appealing 14% growth rates plus $500 million in net bookings synergies in mobile.
  • The stock will trade at a FY23 EV/S multiple of 3.5x, which is a major discount to past multiples.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »
For long-term shareholders, the Take-Two Interactive Software (TTWO) deal to acquire Zynga (ZNGA) for $10 per share is a disappointing valuation considering the stock regularly traded above $11 last year. For short-term traders, the 64% premium provides a good time to exit the stock after a rough last few months. My investment thesis remains Bullish on the stock after the massive hit to Take-Two Interactive takes Zynga down as well.

Read the full article on Seeking Alpha. 

Disclosure: Long ZNGA. Please review the disclaimer page for more details. 

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