NPR : News

Filed Under:

Online Gaming Company Zynga Says Target Valuation Is Around $7 Billion

As we've noted before, 2011 has been a great year for Internet companies seeking to go public. Today, Zynga said it hoped to price its shares at $8 to $10 per share during its initial public offering later this month. Depending on whose math you trust, that means the company will try to raise about $1 billion and the debut could value the company at $7 billion. (Some news outlets are putting that number as high as $9 billion.)

What is Zynga you ask? They're the makers of social games like Farmville and Cityville.

The New York Times Deal Book has more:

In its offering, Zynga appear to be moving cautiously amid the market turmoil and tough environment for I.P.O.'s.

Notably, Zynga, which is set to sell 100 million shares, or 14.3 percent of its total, is offering a bigger stake than many Internet companies that have gone public this year. Several start-ups, like Groupon and LinkedIn, have sold less than 10 percent of total shares in their I.P.O.'s. That strategy of constrained supply has allowed many to soar on their first day of trading, but it has also increased volatility.

The valuation of $7 billion is also softer than many analysts had predicted earlier this year, reflecting the tempered expectations for I.P.O.'s. A number of Internet and technology companies that have gone public this year have tumbled below their offering prices. Groupon, the popular deals site, has lost about $4 billion in market capitalization since its early November debut.

The big picture here is that Zynga is a rare instance of success in the social media landscape. That is to say, it's actually making money. The Los Angeles Times reports that last year, the company made a $90.6 million profit and raked in $597.5 million in revenue.

USA Today reports on what the Zynga IPO will say about the industry:

The IPO fortunes of Zynga are a crucial litmus test for the tech IPO market. Despite the success of LinkedIn, IPOs for Groupon and Pandora have sputtered. Groupon closed its first day of trading in early November at a $16.5 billion valuation but has lost nearly 40% since and is now valued at about $10 billion.

Zynga's performance will also weigh on the outlook for Facebook, which is expected to go public in the first half. As the largest gaming company on Facebook, Zynga is a major contributor to Facebook's revenue. Zynga purchases advertising on the site and shares a portion of virtual goods purchases with the social network.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

NPR

Chess Wars: 20 Inmates, 5 Weeks, 1 Champion

Deep in the woods of New Hampshire, 20 inmates are engaged in a fierce chess tournament in a secluded prison. The prize may be just a paper certificate, but even then, winning means a lot.
NPR

Birmingham Chefs Test Appetite For New Flavors With Supper Clubs

Pop-up dining experiences are cropping up across the country. While diners savor an exclusive meal, chefs get to try out recipes and gauge the local market for their food before opening a restaurant.
NPR

Bernie Sanders Appears Poised To Defeat Hillary Clinton In New Hampshire

Going into the New Hampshire primary on Tuesday, Sen. Bernie Sanders appeared poised to defeat rival Hillary Clinton in the state. NPR explores how meaningful such an outcome would be for each campaign going forward.
NPR

Password Security Is So Bad, President Obama Weighs In

In unveiling a sweeping plan to fund and revamp cybersecurity, the president asks citizens to consider using extra layers of security besides the password.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.