Social gaming giant Zynga is finally ready to take its stocks public. The San-Francisco-based company reportedly plans to raise around US$1.15-billion in an initial public offering that would value the company at US$7-billion.
The expected IPO figure is significantly lower than the $15 to $20-billion valuation the maker of popular games like Farmville, Zynga Poker and Mafia Wars was reportedly looking for when discussions about an IPO first began in July.
But it would, nonetheless, be the largest valuation by a technology firm since Google’s in 2004. In its filing with the US Securities and Exchange Commission, the company set its price at between US$8.50 and US$10 a share.
Zynga’s model of highly addictive games, funded by players buying in-game objects and abilities, has seen it become one of the most successful gaming companies around today.
Unlike a number of other tech companies that have recently gone public, Zynga is actually growing and turning a profit.
Virginie Lazes of investment bank Bryan, Garnier & Co. says that this gives Zynga a distinct advantage over other tech companies like Groupon.
“It’s not going to fall as fast as Groupon,” Lazes said. The daily deals sensation took its stock public just over a month ago. Since going live and reaching highs of $31.14 a share, Groupon’s stock has fallen drastically. A single day’s trading recently saw it drop more than 15% in value. It then recovered slightly, only to fall nine percent in another day’s trading.
Professional social network LinkedIn has also seen its share valuation fall by as much 30% in recent weeks. Its share prices, though, remain higher than those set in its landmark IPO.
Zynga is co-owned by Russian investment company, Digital Sky Technologies (DST), which also owns about 7-10% of Facebook by various estimates. Emerging markets media and internet giant Naspers, an $18-billion company, is also part of the group.
The company’s games on Facebook have more than 200-million active users. In fact, four out of the top five games on Facebook are from the Zynga stable.
Although much of Zynga’s success has been hinged on Facebook, it has recently made a couple of attempts to reduce its dependency on the world’s most popular social network.
The first of these saw it become one of the early partners when Google opened up a gaming portal on its social network Google+.
The second, and more dramatic, saw it opening its own social gaming network, called Project Z. The network allows people to play the company’s popular titles without having to log on to Facebook.