Top 5 Undervalued Tech Stocks

3. Zynga Inc. (NASDAQ: ZNGA)

Number of Hedge Fund Holders: 52

Zynga Inc. (NASDAQ: ZNGA) is a California-based social game developer. The company develops and sells games for mobile platforms such as Android and iOS, social networking platforms like Facebook and Snapchat, and personal computers or video game consoles. The games that the firm sells also provide businesses with advertising services. The company was founded in 2007 and is ranked third on our list of top 10 undervalued tech stocks. It has a market cap of $11.5 billion and posted an annual revenue of close to $2 billion in 2020. 

On April 19, investment firm BMO Capital Markets started coverage on Zynga stock with an Outperform rating with a price target of $15. Gerrick Johnson, an analyst at the investment firm, said the stock was the best play in the mobile game market. Johnson also said that mobile games were the fastest growing segment of the video game industry.

At the end of the fourth quarter of 2020, 52 hedge funds in the database of Insider Monkey held stakes worth $1 billion in the firm, up from 48 in the preceding quarter worth $995 billion.

Artisan Small Cap Fund, in their Q4 2020 investor letter, mentioned Zynga Inc. (NASDAQ: ZNGA). Here is what Artisan Small Cap Fund has to say about Zynga Inc. in their Q4 2020 investor letter:

“We also added to our position in Zynga. Our multiyear investment campaign in Zynga has been based on a new management team’s ability to drive steady growth in the company’s base portfolio of games, expand margins, reinvigorate the new game development pipeline and use its strong balance sheet to acquire complementary games and studios. Shares have been pressured in recent quarters, presumably because of investor concerns about the company’s moderating growth rate and Apple’s pending new privacy policy which will make it more difficult for Zynga to both efficiently acquire new players and sell advertising in its games. We believe the company has multiple growth levers it can pull in the periods ahead, including the rollout of new games, acquisitions, further penetration into international markets and entry into new gaming categories, to name a few. Furthermore, our research suggests the Apple privacy policy change is manageable for larger mobile game developers such as Zynga. Given our strong conviction in the profit cycle, we used recent weakness to add to our position.”