1-Star Stocks Poised to Plunge: Zynga?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online social games operator Zynga (NAS: ZNGA) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Zynga's business and see what CAPS investors are saying about the stock right now.

Zyngafacts

Headquarters (founded)San Francisco (2007)
Market Cap$3.7 billion
IndustryHome entertainment software
Trailing-12-Month Revenue$1.2 billion
ManagementFounder/Chairman/CEO Mark Pincus
CFO David Wehner
Trailing-12-Month Return on Equity(40.3%)
Cash/Debt$1.1 billion / $0
CompetitorsDena
Electronic Arts
Gameloft

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 56% of the 480 members who have rated Zynga believe the stock will underperform the S&P 500 going forward.

A couple of months ago, one of those Fools, GetDatGuap, succinctly summed up the Zynga bear case for our community:

Look at how they operate -- buy up the biggest game fad (or make a quick copy) and milk it dry. There is no way this is sustainable. Game [developers] HATE this company and they will be out of ideas and a solid workforce shortly. Not to mention, most people who play these games will never spend a dollar on it. This company is going nowhere.

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The article 1-Star Stocks Poised to Plunge: Zynga? originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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