Penny Stock Game Companies - Is Now The Time To Buy?

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• Welcome to Penny Stocks Research. Every day we
  bring you the unbiased truth about Penny Stocks.
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• Hi, My name is Aaron and Im with Penny Stock
  Research, today were reviewing our recently
  published article

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• Time To Buy Stock In These Game Companies Zynga
  ZNGA, TransGaming TNG, or Kongzhong KZ?

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• Todays article is inspired by a question from
  one of our readers!
• Daniel emailed me the other day asking about a
  stock he was looking at. It was a gaming company
  based in Canada called TransGaming TNG.

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• I couldn't respond to him right away because I
  needed to do a bit of research. You see, I
  wasnt familiar with TransGaming and I needed to
  dig a bit into their financials.

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• And of course once I started my research, I
  stumbled across a bunch of other penny stock game
  companies that I had to research as well.

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• I have some very opinionated thoughts on the
  gaming industry and to be honest, I think a
  bunch of the companies in the industry are crap!

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• Why I Dont Like The Penny Stock Game Industry

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• XXXXXX

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• XXXXXX

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• XXXXXX

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• My very first interaction with the video game
  industry happened years and years ago back when
  I was a banker in San Francisco. I met with a
  number of companies and studied the industry
  pretty closely.

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• It was right at the time the video game makers
  were transitioning from consoles to PCs. The
  critical driver at the time was the console
  renewal cycle. The Xbox was just released.
  Sony, Sega, and Nintendo were the other
  competitors.

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• No one saw the games for phones on the horizon.
• What I learned from those days the video game
  industry was all about hits.
• The blockbuster game was what every company
  needed.

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• Games were very expensive to create and the time
  and money spent reached into the millions and
  millions.
• If a video game company didnt see a big winner
  right out of the gate, the entire companys
  future could be in jeopardy.

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• Unfortunately, its still that way today and
  thats why I dont like the industry much most
  of them are bad stocks.

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• Penny Stock Game Industry - Blockbusters Needed!

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• Heres the real problem.
• For every one video game that gets the attention
  of the world, there are thousands who flop.
  Dont believe me just go to the Apple store and
  look at how many games there are.

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• Youll find thousands and thousands youve never
  heard of.
• Big winners are hard to come by and they aren't
  as easy to create as many people believe.

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• You see, management teams are stuck between a
  rock and a hardplace. If they roll out a game
  and it doesn't hit the big time right away,
  theyve got a tough choice.

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• Do they spend more money trying to market the
  game and hope the marketing drives enough users
  to turn a profit.
• Or do they just cut the cord and start over with
  a new game?

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• In one situation, they risk more money on a
  mediocre product. In the other, they flush
  millions of dollars down the drain.
• Now, heres the rub
• If the company does get a blockbuster, the
  profits come fast

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• but the pressure to create a new blockbuster
  builds. The costs of implementing improving and
  upgrading a game continues on
• But some day the party will end.

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• The history of video game software is littered
  with blockbusters that are no longer relevant.
• Some investors compare the blockbuster nature of
  video games to that of biotechnology developers.
  Its a good comparison, but totally wrong

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• . While they both put out huge amounts of money
  to create a winning product and a blockbuster
  product can make or break a company the truth is
  biotech companies are different.

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• Biotech companies have a built in customer base
  and are granted long term patent protection
• . No such luck in video games. The hot game
  this year will be forgotten by next year.

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• Regardless, lets dig a bit deeper into three
  penny stock companies Zynga ZNGA, TransGaming
  TNG, and Kongzhong KZ.

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• Penny Stock Game Industry - TransGaming TNG

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Lets start with TransGaming TNG. This is a
company that our reader Daniel asked about.
TransGaming is based in Canada, so I jumped over
to the Sedar Site to review the business. What
I found wasnt too promising.
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Despite a recent agreement to sell some
technology to NVIDIA for 3.75 million, the
company still hasnt generated a meaningful
blockbuster game. Their GameTree product is
focused on settop boxes in the home
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• Personally, I think the future is games on the
  smartphone. I could be wrong.
• However, a few things bothered me about
  TransGaming. First is the company website - its
  woefully empty when it comes to important news
  and information on the company.

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• Second, I dont like it when the company gives
  away stock - its a piece of the business and it
  dilutes current shareholders. see their press
  release on June 5, 2014. They repriced warrants
  and issued 750,000 bonus shares.

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Normally that would be enough for a pass, but I
wanted to dig into the financials... This is the
third thing I didn't like about the company the
financials.
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• The company has some sales, but expenses FAR
  outweigh revenue as a result, they lose several
  million a quarter and the only thing saving them
  is the foreign exchange gains they are seeing.
  Back out the foreign exchange numbers and the
  results are even worse!

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• Sorry Daniel, I wouldn't touch this company with
  a 10 foot pole.
• But is industry leader Zynga any better?

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• Penny Stock Game Industry - Zynga ZNGA

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• Look, Im not going to dive into Zynga too much
  a quick review of their most recent quarter shows
  its a total waste of time.Just look at these
  numbers Revenue is UP 30 to 200 MILLION

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• Yes, 200 millionYET the company managed to
  produce a net loss of 27 million.
• This is not new just look at the chart

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• As you can see, this company imploded shortly
  after going public. Barring a massive
  turnaround, I dont see it getting any better.
• The stock is ugly

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• The company is ugly If you own this stock, dump
  it.
• So, what about Chinese gaming companies?

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• Penny Stock Game Industry - Kongzhong KZ

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• There are a number of companies selling games in
  China but one that jumped out at me is
  Kongzhong.
• Interestingly enough, the company is still
  impacted by the blockbuster plague

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• However, they are making money... and good money
  too.
• Shocker right?
• Last quarter the company announced 50 million in
  revenue and a profit of 19 million thats a
  staggering 38 margin!

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• Is this company a sure thing slam dunk? Far from
  it. They have 10 new products to release in the
  next few quarters and they need to keep costs
  lean and profits high.

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• A huge positive is the strength of the stock
  despite the turmoil in the Chinese markets. This
  company seems to have sidestepped the worst of
  the destruction.

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Any way you slice it, Kongzhong KZ is an
interesting way to get exposure to both penny
stock game companies and China at the same
time. So there you have it the truth about penny
stock game companies and if they are worthy of
investments.
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• If you have a question about a stock or
  investment idea, shoot us an email or leave us a
  comment on the website.
• Better yet, if you own any of these stocks or
  are planning to buy shoot me an email and let me
  know why!

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