Zynga Expected To Raise Between $850 Million and $1.15 Billion In IPO
Zynga has filed documents with the SEC this morning which indicates that they are planning on raising between $850 million and $1.15 billion in their public offering. This is about $15 million more than their previous estimates.
Zynga is seeking to sell about 100 million shares at between $8.50 and $10 per share. They are reservhing 15 million additional shares for extra demand. Zynga is expected to trade on the Nasdaq under the symbol “ZNGA.”
Zynga will be valued at about $7 billion based on 699.3 million shares understanding. This would put Zynga’s valuation at close to Electronic Arts, which is hovering at about $7.65-$7.8 billion. Zynga makes money from selling virtual goods on social games such as FarmVille, CityVille, and Words With Friends. Zynga has about 230 million monthly active users and they have a close-knit relationship with Facebook. Some financial analysts believe that Zynga is rushing their IPO before tech stocks take a major plunge.
Zynga was founded in 2007 in San Francisco by Mark Pincus. Pincus named the company after his dog Zinga. Zynga recorded a profit of $27.9 million on revenues of $597.5 million in 2010. In the first 9 months of 2011, Zynga hit revenues of $828.9 million. Even though Zynga’s revenues are growing, their number of daily active users has fallen two quarters in a row. Zynga currently has 2,500 employees.
The proceeds from the IPO will go towards working capital. About $83.6 million will be spent to satisfy tax withholding obligations that is related to stock of current and former employees. They also plan to use a portion of the proceeds for charitable causes through Zynga.org. In the sale, Zynga will have three classes of shares: Class A, Class B, and Class C. Pincus owns Class B shares and all of the company’s Class C shares. After the IPO, Pincus will control 36.2% of the company voting power. Pincus will not be selling any of his shares in the IPO. No other executives plan on selling stock either.
Some of Zynga’s venture capital investors will be selling their stock, including Institutional Venture Partners, Union Square, Foundry, and Avalon. Google will be selling 1.7 million shares. Kleiner Perkins will not be selling any of their stock.@amitchowdhry or on Google+ at +AmitChowdhry