Groupon recently posted the largest initial public offering since Google. Now Zynga is looking to one-up the social couponing site with an IPO of its own before Facebook enters the public picture.
Zynga officially filed with the Securities and Exchange Commission for an IPO. In the filing, the social gaming company said it would price its stock at $8.50 to $10 a share, and plans to sell 100 million shares. Zynga is making available an additional 15 million shares for over-allotment. All that means Zynga could see an $850 million IPO on the low side and a $1.5 billion IPO on the high side.
“We intend to use the net proceeds to us from this offering for general corporate purposes, including working capital, game development, marketing activities and capital expenditures,” Zynga said in the SEC filing. “We intend to use approximately $83.6 million of the net proceeds to satisfy tax withholding obligations related to the vesting of restricted stock units, or ZSUs, in connection with this offering. In addition, we may use a portion of the proceeds from this offering for acquisitions of or investments in complementary businesses, technologies or other assets.”
When Will Zynga Go IPO?
What the markets don’t yet know is when exactly Zynga will go public. Bloomberg recently reported that Zynga would go public after Thanksgiving. Bloomberg’s reported revelation came after Zynga updated its prospectus to show that 6.7 million of its users were paying customers during the first nine months of 2011. At that time, Zynga also reported that its revenues had doubled to $828.9 million.
Zynga is the undisputed leader in online social games. The company has 232 million active users playing titles like CityVille, FarmVille, Empires Allies, and Mafia Wars. Zynga makes its games available on Facebook, Google+, MySpace, Yahoo, the iPad, iPhone and Android devices. Monies from an IPO could help the company expand rapidly, but long-term success is not a given.
“Zynga has been enormously successful and should attract intense investor interest,” said Greg Sterling, principal analyst at Sterling Market Intelligence. “The question, as with Groupon and the other recent Internet IPOs, is whether there’s any faith in the long-term outlook for the company. Investors are typically buying and then flipping these stocks very quickly, signaling a lack of confidence in the future.”
Brokerages Beef Up Staff
It seems IPOs are back in vogue. Groupon reminded investors of the Internet heydays when it took its stock to the public markets on Nov. 4 with a valuation that was the highest since Google. Groupon followed LinkedIn, which went public in May. Earlier this week, talk resumed about a Facebook IPO, which would overshadow all the rest by raising as much as $10 billion when it goes public sometime in the second quarter of 2012.
The renewed interest in technology IPOs is causing a ripple effect in the analyst market, perhaps to focus on up and coming Internet darlings. Wedbush Securities on Thursday expanded its Private Shares Group, which focuses on many of the fastest growing private companies in the world. The private shares market is developing to help founders, employees and venture investors bridge the liquidity gaps prior to an IPO.