Zynga could be set up for a record year after first-quarter bookings blew past estimates
Corporate earnings releases keep pouring in, and this morning Wall Street is digesting numbers from social gaming company Zynga Inc (NASDAQ:ZNGA), maker of Words with Friends, and online furniture selling expert Wayfair Inc (NYSE:W). While ZNGA is jumping out of the gate, shares of W are pulling back.
For Zynga, investors are cheering the company's much stronger-than-expected bookings for the quarter, coming in at $359 million, a 64% year-over-year increase, as well as a bullish bookings outlook for the current quarter. The results have sparked a flurry of upbeat analyst notes, with Jefferies and Baird both pointing to the company's impressive pipeline of games to drive future growth, and the latter firm suggested that the monetization of messaging apps and the implementation of 5G technology would also be tailwinds for Zynga. Jefferies lifted its price target to $7 and Baird upgraded its rating to "outperform" from "neutral" while setting an $8 price target.
ZNGA shares are trading up 13.4% this morning to top the $6 mark for the first time since 2012, last quoted at $6.25. This just extends the security's hot start to 2019, as it was already sporting a 40% year-to-date lead.
Meanwhile, Wayfair stock is getting hit because of the company's wider-than-expected first-quarter loss and a revenue miss. This has the shares down 8% at $150.50, putting them back below the 50-day moving average that helped cushion a pullback a few weeks back. However, it's notable that the equity is so far holding above the $148 area, the site of the bull gap from the last earnings release in February.
The sharp losses today are good news for short sellers, who've held on to 22.6% of the total float. Going by average daily trading volumes, this equates to 8.9 days' worth of buying power.