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The stock has declined 38.5% in price over the past six months to close yesterday’s trading session at $6.34. Furthermore, JPMorgan (NYSE:JPM) analysts recently reduced ZNGA’s price target to $10 from $12. Also, in terms of forward EV/S ratio, the stock’s 2.59x is higher than the 2.43x industry average. And its 2.63x forward P/S is 50.6% higher than the 1.75x industry average. So, it may not be a wise bet to cash in on the industry’s growth.
However, the demand for video games has skyrocketed due to the COVID-19 pandemic-led remote lifestyle. While easing restrictions this year have been shifting consumers’ focus to outdoor activities, the increasing availability of innovative online, mobile, and cloud gaming should keep driving the industry’s growth. According to a Fortune Business Insights report, the global gaming market is expected to grow at a 13.2% CAGR between 2021 and 2028. Therefore, we think investors seeking to benefit from the industry’s growth could instead bet on quality video game stocks Activision Blizzard, Inc. (ATVI), Electronic Arts Inc . (NASDAQ:EA), and Playtika Holding Corp. (PLTK) instead.
