Zynga (ZNGA-Q)

Videogames are a sector on fire. If GameStop was smart, they would've bought Zynga last week. This reports Wednesday.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A social gaming company. Insiders owns shares and have been buyers. The space remains competitive with hits or fad-like games. It is harder and more expensive to be competitive on the crowded platform. Unlock Premium - Try 5i Free

This could be a classic rounded bottom, or cup and handle. Cup was August to April and handle SHOULD have been after that. But it didn’t break out and moved down instead. One has to be a little skeptical, although it could still break out.

Long ZYNGA (ZNGA-q) and Short Facebook (FB-Q)? A pairs trade that he would probably not put on in his funds. This one’s is interesting but its business model has run into a lot of problems and come under a lot of pressure. One of those sort of failed tech IPOs but is a very beaten up stock. Has quite a bit of cash on their balance sheet. Facebook, on the other hand is a really good business, great company but expensive. Has always found with pairs trade that trying to buy a value, kind of “not great” company at a low price and short a really good company at an expensive valuation to play that spread, typically does not work out well.

Chart shows a long base running from April through January. There is a lot of resistance at around $5. This has been trading at just above the 20 day moving average of $2.78. He would say that this trade is not working.

Big revenue generator for Facebook (FB-Q). This one is too small for the opportunity in the social networking space. If you own, consider switching to Facebook.