Wedbush Morgan analyst Michael Pachter has warned that those dumping Zynga stock may be fleeing a perfectly good investment.
As reported by GamesIndustry, Pachter said stock performance should improve as investors begin to understand how Zynga’s business model works, as current fears about dropping user numbers are unfounded.
“The majority of gamers who discontinue playing Zynga titles are likely to be non-payers, with payers spending more as they make a greater investment of time in each game,” he said.
“When Zynga releases a new high-profile game, we believe that the number of paying users grows steadily for at least a year following launch. As a result, we expect steady payments growth, coming from a slew of releases beginning in June 2011, including Bubble Safari, Empires & Allies, Adventure World, CastleVille, Draw Something, Hidden Chronicles, Zynga Bingo and Zynga Slingo.”
Zynga stock has dropped significantly since its IPO in December, bottoming out last week at less than half its initial price. The acquisition of OMGPOP right on top of a sudden drop in popularity of Draw Something is probably responsible for goosing investors a little.