Zynga's shares are way up this week based on speculation that Zynga could expand into online gambling after the U.S. opened the door to possible legalization. (Zynga) shares have been up 15% in the last week, in part, we believe, from speculation ZNGA may have an opportunity in online gambling if it is legalized in the US. This is a long-shot and highly speculative.
Based on Appdata, Daily Active Users (DAU) for Zynga’s games on Facebook in 4Q were down 6% to 51M from 54M in 3Q. This means ZNGA will need to convert an increasingly larger percentage of users into payers in order to grow. For context, Zynga has 200 million users. Only around 2.4 percent of those users are actually paying customers. So in order to earn more Zynga needs more users or a new revenue stream.
Online gambling can be one or acquire a MMO hard core games publisher which have a higher percentage of paying users convertion of between 6.8% to 7.8% and a higher ARPU.
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