The mobile games industry is experiencing tough competition but Zynga Inc (NASDAQ:ZNGA) seems to be ahead of it. Interestingly, it is difficult for a company to maintain that top spot. Usually, companies enter the market with chart-topping games but struggle to maintain the performance. However, various strategic announcements and products are making Zynga stock climb.
Bloomberg cites anonymous people who reveal that Zynga is receiving approaches in the direction of acquisition. As per the news outlet, the discussions are private and may not come out any time soon. Specifically, the company boasts an enviable collection of games under its name.
Zynga stock climb in response to strategic announcement
Further, Zynga signed a deal with Disney that will see the company create games modelled after Star Wars franchise. Normally, these are the positive reports that attract suitors looking for acquisitions.
As a result of the announced deal, Zynga shares soared 12% on Tuesday. This represents the highest jump in almost four months. Particularly, this year has seen an almost flat trading in the company stock. Interestingly, Zynga has a modest market cap of about $3.5 billion.
Perhaps, this capitalisation is what attracts suitors since it is well within their reach. Most of the larger industry players have larger market capitalisations.
Increasingly lucrative market
Interestingly, the larger industry players are looking to shore up their position which is under threat. The mobile gaming industry is one of the most competitive technology sectors. According to Bloomberg, the competition is seeing the industry register mammoth growths in terms of gross market capitalisation.
Also, the industry has seen a lot of takeovers in the last 3 years. This is for the reason that larger firms are looking to acquire talent from smaller competitors. Furthermore, the market is becoming more lucrative as more and more people get access to mobile phones. Interestingly, most of the gaming giants that were seeing flat performance are now experiencing up to double-digit profits.
As CNBC reports, the latest soaring in shares is the “biggest move for Zynga’s stock since early 2014.” Therefore, it is possible that the company might see more offers for a takeover in the coming days. As a result, a further Zynga stock climb is possible in the near future.
