Sixxac

Like Facebook, Zynga has had a very embarrassing year following its IPO. Share prices have tumbled beyond belief from around $15 to $2.45; it’s painful to read I know. Social gaming was 2012′s fastest bubble; people saw money, they flooded the market and now we’re left with a bunch of rubbish games and no one to play them. Consumers have lost faith in social games; they’re wising up to the quasi-brainwashing that was passive aggressively forcing gamers to part with millions of dollars a year.

But Zynga (ZNGA) is onto a potentially huge break. If you’re not familiar with the poker market then all you need to know is that it has been effectively outlawed in the US for 2 years. But with the US government eager to grab more precious tax money, a new regulated type of poker may be hitting the market very shortly. And poker regulation means one thing – Zynga (with an already hugely popular free-to-play poker platform) – will be there. So people who are looking for where to play poker in the US (featured on pokerisrigged.com) may find licensed operators as soon as late 2013.

But where does this leave Zynga’s waining share price? Even if poker is opened up in America, isn’t there every chance that another company will beat them to it? Well Zynga has recently been speaking with Nevada officials to obtain a gambling license; and the value of Zynga to them is enormous. Zynga has millions of poker players on their current free software; that’s millions of highly qualified and highly valuable players who would chomp at the bit to play for real money on Zynga. Poker players are a loyal people, if Zynga gets the license then they’ll instantly convert free players into paying ones, and their stock price could quadruple very quickly.

For us, ZNGA is as low as it can get and the taste of gambling has already seen big stock price jumps of 5-10; but can we expect more?

The last few months have been record breaking for a number of reasons. We’ve seen one of the most anticipated IPOs backfire enormously, we’ve seen a market come and go in the form of social gaming; and now we’re sat helplessly as one of the greats – Apple – has a stock price catastrophe! This week we’re going to start by examining Facebook, and our thoughts might surprise you.

Facebook

Facebook opened its shares to the public in early 2012 at a price of $40; 6 months later the stock was trading at an all time low of nearly $17. What happened here was overeagerness; Facebook was a miracle company and that was reflected by its miracle valuation. Traders wanted a piece of the 21st Century’s most anticipated stock, they wanted to ride that expected rally all the way to $1,000 per share and reap the rewards of being an early adopter. Unfortunately for them, that didn’t happen.

In the first few weeks of IPO, FortuneSpreads.com listed Facebook as the most traded stock across all of the spread betting companies that they deal with. But FortuneSpreads have also released a statement that in as many words says ‘BUY NOW‘, and at Sixxac – we’re inclined to agree.

You see, we think that Facebook is undervalued. The reality is that Facebook has 1,000,000,000 human beings using it… that’s… enormous – unprecedented – unimaginable… they have a growing ad network and a social platform that could one day provide real money gambling. And Facebook’s ad platform is only really starting to take off, we spoke to Nick Pateman – marketer and founder of the Leicester web design company, Inbound Digital Marketing. He’s confident that Facebook’s new ad serving network is onto a winner:

“[Facebook] are integrating ads more and more effectively. It’s reminiscent of AdWords in that we’re seeing huge ROIs in its early stages; and these returns are just going to attract tens of thousands more marketers.”

For us, Facebook is a stock that those who didn’t invest will look back in 5 years and say “that was so damn obvious!”. At the end of the day, we’re looking at a company with an enormous amount of power who is trading at $27 per share. And we believe that the skepticism surrounding the value of social is totally misplaced and unjustified.

Of course this is just our opinion, and we could be completely wrong…