An "outperform" rating on Zynga was terribly wrong, but the online gaming company still stands to be profitable next year, Wedbush Securities Managing Director Michael Pachter said Friday on CNBC.
"This is the worst call I've ever made in my life," he said. "But look, there's value in Zynga. They have 300 million users. The equity is trading at something like 20 cents, 25 cents, so you're talking about enterprise value of something like $250, $300 million on $1.1 billion in revenue."
As for the expiration of Zynga's deal with Facebook that allows the gaming company to host games outside the social media platform, Pachter wasn't overly concerned.
"Big deal, Facebook can make gains. They're not going to," he said.
Instead, Zynga could see an increase in cash flow, Pachter added.
"They're going to go profitable next year," he said. "I think the stock's going to go up."
Facebook, meanwhile, has a catalyst ahead sure to drive its stock price higher, Pachter said.
"I think a lot of people are overlooking that Facebook has to go in the S&P 500 sometime in next several months, and when it does, you know, rule of thumb is, about 20 percent of the float gets sucked up by index funds, so I think there's going to be a lot of buying demand," he said.
Pachter called Facebook "just a fundamentally good company" that would see positive ad revenues this quarter, especially with spending from political campaigns.
No change on Pachter's price target, though. "Thirty-five's plenty," he said.
Pachter also explained why he initiated coverage of LinkedIn with a "neutral" rating.
"LinkedIn really is a neutral if ever there was a stock," he said. "It's a great service, a great product, they've got great growth potential, but a $106 price tells you these guys are going to make $8 a share five years from now, and that's about the right number."
If that's the case, investors have better options.
"You'll make more money in Facebook than you will in LinkedIn in the next year," he said.
Written by Bruno J. Navarro, CNBC.com Producer.
Trader disclosure: On Nov. 30, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Jon Najarian is long AAPL; Jon Najarian is long JPM; Jon Najarian is long FB; Jon Najarian is long GOOG; Jon Najarian is long TJX; Jon Najarian is long JCP; Jon Najarian is long EXPE; Jon Najarian is long MA; Jon Najarian is long YUM; Jon Najarian is long RGR; Jon Najarian is long GT; Jon Najarian is long STSI; Jon Najarian is long GLUU; Jon Najarian is long CME; Jon Najarian is long CBOE; Pete Najarian is long AAPL; Pete Najarian is long JPM; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long TCK; Pete Najarian is long MRK; Pete Najarian is long NOK; Pete Najarian is long LLY; Pete Najarian is long CE; Pete Najarian is long RHT CALLS; Pete Najarian is long VMW CALLS; Joe Terranova is long VRTS; Joe Terranova is long TJX; Joe Terranova is long AAPL; Joe Terranova is long YUM; Joe Terranova is long SWN; Joe Terranova is long GLW; Joe Terranova is long DELL; Joe Terranova is long VZ; Joe Terranova is long XOM; Steve Weiss is short JCP; Steve Weiss is long M; Steve Weiss is long T;
For Michael Pachter
FB/ZNGA:
1. WS makes a market in the securities of the subject company.
2. WS managed a public offering of securities within the last 12 months.
3. WS co-managed a public offering of securities within the last 12 months.
4. WS has received compensation for investment banking services within the last 12 months.
5. WS provided investment banking services within the last 12 months.
6. WS is acting as financial advisor.
7. WS expects to receive compensation for investment banking services within the next 3 months.
8. WS provided non-investment banking securities-related services within the past 12 months.
9. WS has received compensation for products and services other than investment banking services within the past 12 months.
10. The research analyst, a member of the research analyst's household, any associate of the research analyst, or any individual directly involved in the preparation of this report has a long position in the common stocks.
11. WS or one of its affiliates beneficially own 1% or more of the common equity securities.
12. The analyst maintains Contingent Value Rights that enables him/her to receive payments of cash upon the company's meeting certain clinical and regulatory milestones.
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