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Of a day for -- -- taking a look at shares they are sinking nearly 15% after the company reported its first post IPO earnings report.
While earnings beat expectations.
Analysts were disappointed by the company's guidance so what does and this mean for the social game maker than me now is our inbox he had he's a senior research analyst for Sterne Agee and -- then that it's great to have you on mix I know you haven't been net.
A big fan of this stock I mean even before the company IP OD -- a sell rating on accident trading.
I training wheels are finally off freezing to share -- what are the first report tell you.
Yeah thanks -- -- yeah I think the first quarter tells us.
Basically that we were right in terms of our assumptions that that the company's growth is slowing significantly.
And that the multiple that the stock is getting just isn't -- -- and our mind.
As a cautionary tale here I think that there are some positives and negatives that the negatives activity outweighed.
The traffic for example was flat this quarter of -- last quarter 54 million daily active users.
And that the company talked about our new metric coverage raise -- red flag.
Possibly change the way the they explain their monetization was -- all is concern when a company changes the way that aboard midstream.
And it also they're talking about the 2012 growth being more back end loaded.
That raises a red light in our mind.
And then we look at the average revenue per user error on their -- game business that seems to be down approximately 6% sequentially.
Those are not signs of a growth company and therefore we continue to believe that the multiple is companies getting is not sustainable.
-- I don't think that quarter really reinforce our viewpoint on the company.
You talk about -- changing.
Changing factors here -- -- monetization levels that there that they brought up yesterday he also talked about consumers spending lastly gamers spending last.
Could one make the argument.
It has a right to -- change its -- sit and think about the way in and perhaps.
Seeing -- seasonality that it never stop before as well.
I think guy.
You know it's a fair point but I think that if they were to disclose.
I knew that there -- disposing a new metric to have to at least give us a comparable data going back.
What we lacked was a historical data so it's hard to compare.
How all we have as the third and fourth quarter information.
Which by the way was clouded by the company including.
I'm mobile pay errors which they -- -- considerably lower rate so for example if you bought if you downloaded words that friends for a dollar.
That's counted as of hair that's not comparable to somebody that's paying -- say ten bucks a month.
But if you love the -- together.
And the metric go on the number of -- looks artificially high.
So it's they you know it's it's it's their right to change.
The metrics but they have to give the historical information expressed -- -- -- -- but let me talk about that -- -- -- you know glad there is a lot of concern on the about the reliance on face but basically for all of its revenues.
And then also on the flip side FaceBook and Mark Zuckerberg essentially having complete voting control not just over FaceBook but also over is saying that.
What is the -- a level of -- that is associated with this being tied to FaceBook and what is is possibly foretell about.
Facebook's own IPO.
I think the -- -- Zynga hasn't FaceBook would continue.
To be very high in the foreseeable future.
They've for example did not disclose the -- that is -- the percentage.
Off revenue from based of this quarter but our estimate is it still north of -- 90%.
Probably still pretty close to ninety -- 94%.
And with respect to FaceBook I think god there are many differences in a phase because of big platform.
And does not platform.
And -- FaceBook will be able to a lot more easily diversify away from -- They drive that -- -- write about 12% -- revenue from Zynga and I think that's gonna decline now much more next year.
And I internationally I think goth phase that has a lot of opportunity is primarily an advertising company.
How much -- charges that taxed at 30% on vendors.
I -- it I think eventually will go up yet and now one of the reasons they got grew this quarter was they're advertising revenue.
From its -- but doesn't get anything right now -- and I think at some point basement is gonna -- tax that as well.
Our -- raised by the -- in new school here we have to we have to leave it here sorry we're running out of time Marvin -- -- journey deep thank you very much for joining us today.
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