On Monday rumors began to surface that Yahoo (YHOO) may be interested in acquiring online gaming company Zynga (ZNGA). Zynga shares jumped up over 10% and volume spiked when the news broke.
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Shorts have been loving Zynga because of its year-long free fall, plummeting in price from over $13 to under $3.
The rumors come from Yahoo's chief of mergers and acquisitions who claimed they are working on two moves. It is also known that Yahoo wants a stronger position in social media. And Blake Harper, of Wunderlich Securities, made a statement concerning Yahoo's interest in the gaming company, which has really fueled the fire.
Yahoo may be interested in Zynga for another reason. Nevada and New Jersey, the nation's two largest gambling states, recently announced the legalization of online gambling. Online mobile gambling stocks have been rallying since.
Yahoo closed down around 1% on Monday. If this buyout happens, how do you see this deal playing out for each company? Investors seemed happy to hear that Zynga has the potential of being bought out by a large company like Yahoo. Is it possible the stock will see another big spike up if Yahoo confirms the rumors? We'll have to keep an eye on this one in the coming weeks.
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1. Zynga, Inc. (ZNGA, Earnings, Analysts, Financials): Market cap at $2.8B, most recent closing price at $3.57.
2. Yahoo! Inc. (YHOO, Earnings, Analysts, Financials): Operates as a digital media company that delivers personalized digital content and experiences, across devices and worldwide. Market cap at $25.22B, most recent closing price at $22.90.
(Written by Ryan Horch)
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