The video-game developer has consolidated in a key price zone for the last 10 months. It gapped higher on a strong report in early February and then slid along with the rest of the market as coronavirus spread.
But it barely pulled back. ZNGA only closed below its 200-day a handful of times before clawing higher. It made its low on March 17, almost a week before the broader S&P 500 . The longer-term chart also seems to be forming a cup-and-handle pattern.
ZNGA was already benefiting from stronger ad revenue before the coronavirus correction. Now it has the added catalyst of users spending more time on their mobile devices as they stay home. Analysts including Cowen and Bank of America have cited this trend in research notes. Oppenheimer also initiated the stock at “outperform” on March 18 with a $7.50 target price.
Traders may want to watch ZNGA around its current levels. The stock had a weekly high of $6.85 on March 10, which was resistance again last Friday. A breakout of this zone, combined with potential steadying in the market, may draw buyers. Given how long it’s consolidated, now could be the time for an upside extension off the 200-day .