Although Zynga shares soared on Thursday following the company's announcement that it has filed an application for a Nevada gaming license, one analyst still sees the stock as a "risky bet."
"We really looked at it on a global basis, and there just are not a lot of countries where online gambling is legal, and there are a few states," said Ken Sena, an internet analyst at Evercore Partners. "And where it is legal, it tends to have punitive taxes and it tends to favor sort of the brick-and-mortar legacy casinos because they provide more jobs and more tax revenues, so we see this as a long shot."
Sena said he has a $1.70 price target on the company's shares along with an "underweight" rating. Zynga's online gambling opportunity represents 20 cents of this valuation. This price target is sharply lower than the $2.50 range that the company's shares were trading around after jumping 9 percent in midday trading.