What Happens to Zynga Stock After Being Acquired by Take-Two?

As a passionate gamer and content creator who analyzes the gaming industry, the first question many Zynga shareholders had after the Take-Two acquisition was: what happens to my Zynga stock now?

Zynga Shareholders Received Cash and Take-Two Stock

When the $12.7 billion acquisition closed on May 23, 2022, Zynga shareholders received $3.50 in cash and 0.0406 shares of Take-Two common stock for each Zynga share they previously held. This valued Zynga at $9.86 per share, a 64% premium over its last closing price before the deal.

Though the Zynga brand itself will likely continue, Zynga formally became part of Take-Two Interactive as a wholly owned subsidiary. Public trading of Zynga shares ended on the NASDAQ after 11 years as Take-Two assumed full ownership.

Combined Entity Poised for Growth in Mobile and Cross-Promotion

Industry analysts view Take-Two‘s move to acquire Zynga as a strategic play to bolster Take-Two‘s expertise in the high-growth mobile and casual gaming arenas where Zynga thrives.

Take-Two CEO Strauss Zelnick touted cross-promotion opportunities between Zynga‘s mobile portfolio and Take-Two‘s console and PC titles after the deal:

"We will aspire to the highest standards of corporate governance, ethics, and values. We believe in bringing out the best in each other. We believe talent wins."

In my view as a gaming industry expert, this sets the stage for integrated gameplay between titles like Words with Friends and the Grand Theft Auto series down the road.

Zynga‘s Key Mobile Game Franchises

*Per AppMagic via Data.ai as of 5/2022

The added distribution channels and built-in user bases that Zynga brings to the table give Take-Two a running start to capitalize on emerging trends in casual gaming, social interaction, and mobile play-to-earn models.

Further cross-promotion between these mobile titles, console evergreen titles like GTA and NBA2K, and PC gaming ecosystem hold strong likelihood in my view.

Value of Take-Two Stock After Acquisition

With the acquisition complete, former Zynga shareholders now hold stake in the future performance of Take-Two stock. How has the market responded?

While Take-Two‘s share price dipped nearly 6% on the acquisition news in January 2022, it quickly rebounded. As of February 2023, Take-Two trades around 5-10% higher than pre-acquisition levels from a year ago:

This demonstrates continued confidence in expected returns under the new combined gaming enterprise.

Third quarter fiscal year 2023 results released in early February noted that recurrent consumer spending (virtual currency, add-on content, in-game purchases, etc.) now makes up 63% of Take-Two‘s bookings. Mobile gaming specifically produced record bookings, up 139% over the last year per the report.

So the integration of Zynga‘s capabilities here seem to be bearing fruit in Take-Two‘s early numbers. Bullish signs for the amalgamated entity in my analyst opinion.

Outlook: Short and Long Term Expectations

Here I‘ll provide my evaluation on what shareholders and industry observers can anticipate happen to their Take-Two holdings in both the near term and over the next five years.

Short Term: More Milestone Releases in 2024

• Grand Theft Auto VI finally getting a full reveal after years of anticipation tops the list of expected announcements this year. Though timelines still not formally disclosed, rumors point to late 2024 release.

• NBA 2K23 showing strong early reception and engagement numbers while WWE 2K23 received great reviews last month, scoring 84 on Metacritic.

• Multiple mobile title updates and releases expected across Zynga‘s poker, casino, puzzle franchises and more to build on momentum cited in latest earnings report.

With these positive catalysts, I anticipate modest share price appreciation in the 10-15% range year-over-year.

Long Term: Deep Bench of IP Driving Growth

Zynga‘s acquisition solidifies Take-Two‘s bench of intellectual property for development over the next decade span. Combined, the two gaming leaders now tout ownership of many of the most recognizable franchises across consoles, PC, and mobile:

• Rockstar Games: Grand Theft Auto, Red Dead Redemption, L.A. Noire, Bully
• 2K: NBA 2K, WWE 2K, Borderlands, Civilization
• Private Division: The Outer Worlds, Ancestors: The Humankind Odyssey
• Zynga: Words With Friends, Zynga Poker, Farmville, Merge Dragons, Empires & Puzzles, Game of Thrones Slots

I project the diversity and strength of Take-Two‘s IP catalogue enabling annual bookings growth between 10-15% for the foreseeable future.

My 2027 price target sits at $215/share, representing potential 27% appreciation from current 2023 highs.

Final Takeaway for Shareholders

With full ownership and operational control secured in the acquisition, Take-Two now houses this wealth of intellectual property under one roof alongside ample resources to further expand its total addressable market.

Savvy industry move putting Take-Two in the driver‘s seat of the booming mobile gaming market while augmenting ability to cross-promote across its unparalleled stable of console and PC hits.

For shareholders, this strategy and the company‘s strong execution exhibited of late underscore why I remain highly bullish on the equity over both near-term and long-term horizons. Consider Take-Two a buy and hold in any growth-oriented gaming portfolio.