Some “good” news has come out of Zynga’s recent announcement that they had applied for an online gaming license in Nevada. A day after news broke out that the world’s largest free-to-play online poker company had filed an application for a license to operate real money online poker within the state, company stocks shot up by 6% to $2.46 premarket, according to the Wall Street Journal.
It’s hardly a coincidence that the bump in its stock prices shortly after the announcements were made. But even that sliver of positivity wasn’t enough to dissuade Evercore Partners Internet analyst Ken Sena, who remains cautious about the company’s prospects.
In an interview with CNBC, Sena said that while it’s always a good thing for a company to see their stocks shoot up, this particular circumstance isn’t entirely indicative of the improving state of affairs for Zynga.
“We really looked at it on a global basis, and there just are not a lot of countries where online gambling is legal, and there are a few states,” Sena said on CNBC.
“And where it is legal, it tends to have punitive taxes and it tends to favor sort of the brick-and-mortar legacy casinos because they provide more jobs and more tax revenues, so we see this as a long shot.”
Sena also indicated that his price target for Zynga’s shares is at only $1.70 compared to the $2.46 the company’s shares were trading around during the midday trading. According to Sena, 20 cents of the shares overall value is his value of the company’s core business with the hard assets priced at $1.30.
“There is the potential for more value there so I’m not necessarily saying that this a short, but we still do continue to see this as sort of a risky bet so we are underweight on it,” he said.