Monday, July 2, 2012

Greenfield: Buy Zynga, Wait on Facebook

BTIG's Rich Greenfield says Zynga has 60 million people playing its games every day

From Barron's:
BTIG Research’s Rich Greenfield and Walter Piecyk this morning were on Bloomberg TV trumpeting their out-of-favor stock picks, which include Zynga (ZNGA), on on Greenfield’s part, and Clearwire (CLWR) on Piecyk’s part.

Greenfield emphasized that Zynga is not an Internet advertising company.

What Zynga really is, more than anything else, Zynga is a data company. I really think that’s what investors miss the most. They have over 60 million people playing their games every single day. They’re capturing data on what you like and they’re literally using that data to increase the frequency of your play as well as increase how much you spend. Think of it as another form of entertainment, like television.

Piecyk said it wouldn’t necessarily be a bad thing if Clearwire were to end up shutting down as a wireless operator, given its spectrum holdings.

There’s a limited amount of spectrum out there, and Clearwire is sitting on a ton of it. If it does go out of business, if they don’t make debt payments, it may actually be a positive for investors throughout the capital structure, because when they auction this thing off, and they’ve got 160 megahertz of spectrum, and when AT&T (T) and Verizon [Communications (VZ)] show up, as long as the current administration doesn’t stop them from buying the spectrum, there’s a lot of value here relative to what the stock is reflecting.

Clearwire shares today are down a penny at $1.11, while Zynga stock is up 7 cents, or 1.4%, at $5.51. Clearwire shares have fallen 71% in the last 12 months, while Zynga is off 42% this year.

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