Weekly Internet Notes: Zynga, Facebook, eBay

September 18th, 2015 · by Trefis Team
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Internet companies have to move swiftly to keep up with the competition in their dynamic and rapidly evolving markets. This week was no different, with a number of companies such as Facebook and eBay introducing new measures and tools, and changing their policies to keep up with the growth in their respective markets. Moreover, Zynga last week acquired another gaming company to bolster its presence in the ‘Social Casino’ gaming genre. Below are some details.

Zynga

Zynga (NASDAQ:ZNGA) recently announced the acquisition of Rising Tide Games to strengthen its position in the Social Casino gaming genre. [1] This will allow the maker of Zynga Poker, Hit It Rich! Slots and Wizard of Oz Slots to deliver even richer slots games in the future. We expect this acquisition to bolster growth in Zynga’s Slots franchise, where bookings rose by 274% annually and 32% sequentially during the most recent quarterly results.

We forecast Zynga’s revenue in 2015 at $697 million. We maintain a $3 price estimate for Zynga’s shares, which is over 25% above the current market price.

[trefis_slideshow ticker=”ZNGA” rhs=”3″]

Facebook

Facebook (NASDAQ:FB) recently introduced the “Signal” tool that will allow journalists to find, gather, and embed news-related content from Facebook and Instagram. [2] This latest offering comes against the backdrop of a series of tools released recently by Facebook for the media community, including Instant Articles. We believe this move is also targeted to keep up with Twitter, whose real-time tweets are widely syndicated across different platforms.

In addition, Facebook recently rolled out some changes in its video advertising business. These pertain to allowing advertisers to pay only when the users view the entire video. In addition, the social network also partnered with a third-party company, Moat, for independent measurement of ads. These changes should further bolster demand for advertising on Facebook over the long run, as third-party attribution will help bring more credibility to its advertising business. [3]

We estimate Facebook’s top line and non-GAAP diluted EPS in 2015 at $17.5 billion and $2.13, respectively. We maintain a $102 price estimate for Facebook’s shares, which is slightly ahead of the current market price.

[trefis_slideshow ticker=”FB” rhs=”3″]

eBay

eBay (NASDAQ:EBAY) recently introduced a program similar to Amazon Prime in Germany, allowing for faster and free shipping. Labelled as ‘eBay Plus’, the service will cost approximately $22 a year. [4] While the company will initially test this service, we believe it could also introduce the program in other markets if the experiment turns out to be successful. Moreover, eBay seems to have stepped up its efforts to more closely collaborate with sellers on its platform, and appears to be improving the rating system for sellers. This move is encouraging, as sellers are an essential part of the company’s business, and lately some issues had created significant dissatisfaction among its seller community.

We forecast eBay’s revenue at $8.6 billion and its non-GAAP diluted EPS at $1.92 for 2015. Our $31 price estimate for the company’s stock, represents a premium of around 15% to the current market price.

[trefis_slideshow ticker=”eBAY” rhs=”3″]

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Notes:
  1. Zynga (ZNGA) Acquires Rising Tide Games, StreetInsider, September 14, 2015 [↩]
  2. Introducing Signal for Facebook and Instagram, Facebook, September 17, 2015 [↩]
  3. Facebook Just Made 2 Big Changes to Appease Advertisers on Viewability, AdWeek, September 17, 2015 [↩]
  4. eBay tests a speedy shipping membership service in Germany, Fortune, September 11, 2015 [↩]
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