Zynga (NASDAQ: ZNGA) - Starting New Bullish Sequence

Elliottwave Forecast  |

With popular games like FarmVille and Zynga Poker, the American publisher has managed to stand out in a crowded market.

In the recent decade, the number of gamers grow in a fast pace and leading companies like Activision Blizzard  (ATVI) and Electronic Arts  (EA) are providing more creative content with better graphics. Investors turned to gaming stocks and helped to drive the market higher in the recent year. However despite the uptrend for the sector, ZNGA remained as an undervalued stock with a price below $5 with huge potential in the future.

Despite last year's sell-off in EA and ATVI, ZNGA remained in a sideways range and closed 2018 for only -2%. Currently at the start of of 2019, the stock is already +14%, so with the earnings report coming this week we'll take a look at its technical chart.

ZNGA Weekly Elliott Wave Chart

Zynga ZNGA Weekly Chart

In the above chart, the stock made an impulsive 5 waves advance from the 2016 low which ended in June 2018 at a $4.57 peak. Then the stock corrected the entire cycle lower in a classical 3 waves zigzag structure before turning higher again. So ZNGA established a new bullish Elliott Wave trend with impulsive momentum to the upside and corrective structure to the downside.

Click to enlarge

At this stage, the stock managed to break above the 2018 peak which confirmed the bullish path, and it's now presenting a new incomplete bullish sequence for the stock. The measured target to the upside starts at the 100% Fibonacci extension at $6.11, which could remain a minimum target with a potential move above the 161.8% Fibonacci extension at $7.84 if the stock has enough momentum to continue as a regular impulse. Consequently, the previous 2-year bullish cycle could be only the first wave of a bigger 5 waves move to the upside.

Conclusion

The gaming industry outlook remains promising, and Zynga is becoming a primary actor in the market, driving huge potential for its stock to rise. The technical picture for ZNGA looks bullish, and it could see a strong breakout in the second quarter of 2019.

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Companies

Symbol Name Price Change % Volume
EA Electronic Arts Inc. 113.48 0.39 0.34 1,564,885 Trade
ATVI Activision Blizzard Inc 60.13 -0.19 -0.31 5,297,196 Trade
ZNGA Zynga Inc. 6.39 -0.13 -1.99 24,205,658 Trade

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