Most of the investors recently have been curious over the performance of Zynga Inc. (NASDAQ:ZNGA) stock. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of ZNGA, the chart has some interesting things to say about where the stock might be headed in the future.

How has the stock performed recently?

Zynga Inc. (NASDAQ:ZNGA) in the last month has decreased -3.65%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 80%. After the latest session, which saw the stock close at a price of $3.70, ZNGA sits below its 52-week high. Zynga Inc. (NASDAQ:ZNGA) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.

Momentum indicators

Of course, these surface-level price movements don’t tell us much about the direction that ZNGA may be headed in the future. To forecast a stock’s future performance, analysts use momentum indicators, which take into account the size and speed of these price movements. As momentum begins to slow, it may be a sign that a recent trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for ZNGA is 47.07%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 12.25%, tells a different story, and suggests that ZNGA currently trades in oversold territory.

What do the trading volumes reveal?

In addition to price, analysts use volume trends to predict future performance. The level of trading activity in a stock is often a good proxy for the level of interest and enthusiasm for the name within the investment community. A sudden increase in activity can be a sign that investors are trading in anticipation of a catalyst. Zynga Inc. (ZNGA) average trading volume of 9,125,810 during the past month is 13.9% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.

What do the analysts think?

ZNGA is currently undervalued by -11.9% relative to the average 1-year price target of $4.20 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.50, which implies that analysts are generally neutral in their outlook for ZNGA over the next year.

How risky is the stock? 

No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.

Zynga Inc. (NASDAQ:ZNGA) has a beta of 0.72, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. ZNGA therefore has a below average level of market risk. During the past couple of weeks, ZNGA average daily volatility was 17.84%, which is 8.15 percentage points lower than the average volatility over the past 100 days.