Zynga Inc. has officially filed for its initial public offering in documents that value the social gaming firm at between $7.7 billion and $9.04 billion, about a third less than the $14.05 billion valuation in the company’s previous filing. It now is offering 100 million shares – 14.3 percent of its total – for $8.50 to $10 each. According to Bloomberg, the high end of that range would value the company at 6.8 times trailing 12-month sales.
Zynga chief executive Mark Pincus and chief financial officer David Wehner will embark Monday on an investors’ roadshow to investors in cities including Chicago, Boston, New York, Denver and its home base San Francisco. Materials from the roadshow are posted online here.
With more than 260 million monthly active users, Zynga is the largest publisher of Facebook games, with Zynga Poker, Mafia Wars and the “Ville” franchise that includes FarmVille and CityVille leading the pack. Its revenue comes from sponsorship and sales of virtual items.
The company is profitable, with recorded earnings of $30.7 million for the first nine months of this year on revenue of $828.9 million. Its earnings are volatile, however, due to its development costs and product cycle.
Skeptics also note that Facebook’s growth is slowing down, Zynga’s conversion rate to paying customers is only about 3 percent, and there is some AppData evidence that its latest game, CastleVille, cannibalized players from other Zynga games rather than attract new ones. Another concern is that Pincus holds a class of shares with 70 times more voting power than the common stock that will be sold in the offering.
Zynga is being advised by Morgan Stanley and Goldman Sachs. It is expected to make its debut Nasdaq near the middle of the month with the ticker ZNGA.
Related links:
SEC filing – http://tinyurl.com/bth6xf2
Roadshow posting – http://tinyurl.com/7rrut5j
Reuters – Zynga seeks lower IPO value in tough market
NY Times’ Deal Book – Zynga Aims to Raise $1 Billion
Bloomberg – Zynga Seeks as Much as $1 Billion in Initial Offering
The Street – Zynga’s Biggest Threat: Mark Pincus
Business Insider – Despite What You Read, Zynga Is NOT “Profitable”
