Zynga targeting $900 million IPO

Social game maker trims previous filing valuation as investors express concern over sustainability and voting power dispersal.

Zynga is finally going public, but market fluctuations are changing the social game maker's plans on a weekly basis. The company filed initial public offering (IPO) papers stating a valuation of $14.05 billion just two weeks ago, but now it is scaling back that number to stay in the good graces of investors.

Zynga's IPO valuation is still in flux.

Going into its IPO, Zynga is looking to issue 100 million shares at a price between $8.50 and $10 each, according to Reuters. This would put the total valuation for the company at $9.04 billion, compared to the $14.05 billion figure bandied about after its initial IPO filing.

However, some would-be investors are concerned about the future and the potential impact that a slowed pace of growth alongside Facebook might have on the social game maker. Other concerns surrounding the IPO include potential issues regarding Zynga CEO Mark Pincus holding a class of shares that grant 70 times more voting power than the common stock. Following the IPO of 100 million shares, Pincus will retain 36.2 percent of total voting power. Reuters quotes a buyer saying, "Future shareholders should assume Zynga won't listen to them."

Zynga is to set its IPO share price on December 15 with public trading starting on December 16.

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Discussion

44 comments
tschooduck
tschooduck

not sure I get it, what is the reason why they lowered the price of their shares and thus devalue their company's worth? Any investor will obviously see that as a try to get some cash on the last wind, and from what I see Zynga is here to stay, so why go for such desperate moves, is there something else they are not telling us?

xdude85
xdude85

I still don't understand the appeal of Facebook games.

Lucidmike78
Lucidmike78

I was addicted to Mafia Wars for a good year until I realized that in order to stay on top, I had to keep playing every waking hour of the day. It went from a casual game to a game that demanded so much of your time, and I am certain a lot of players like myself blocked the app and never looked back about a year ago.

Richardthe3rd
Richardthe3rd

Zynga is quickly shaping up to be the Worldcom of the video game boom, with Pinkus filling the role of Bernie Ebbers quite adequately thus far. Also, 9.04 billion is too high. The fact they've been promising everyone and their mother stock options doesn't mean the SEC will let them get away with this crap. I truly hope filing for the SEC turns into a complete watershed for Zynga and they all lose their shirt. Whenever Pinkus does jump ship (and he will) that will be the first sign. Just be ready.

darkman006
darkman006

I play Cityville and Mafia Wars, but Zynga's customer service still sucks. But what else is new when your a big faceless corp.

Sgthombre
Sgthombre

I wouldn't touch their stock with a fifty foot pole. It will be offered at around $10, sure, but don't expect that to go anywhere but down.

Meet391
Meet391

@jamyskis You're right. Facebook games are nothing compared to PC or console games. I've also played and liked many games on Facebook, but I have no love for the concept of spending money to continue playing a game which may or may not exist in the near future. And the ironical fact is having a spend-n-play game on a free social networking site. I hope people stop spending their earned money to play such games, which capture nothing of its gamer.

Meet391
Meet391

Read the comment of @Evilbunz of Dec 3 9:02 PM. That is facebook in a nutshell. It is not a site to make friends, or to upload photos, or anything else you might do on it. For corporate greedy-ees, it is the best source of information. This guy/gal is revealing the truth. Using facebook, and I quote Evilbunz, "they can market you towards your needs right down to what color underwear you want. " @Evilbunz Thanks so much for sharing this. Thumbs up for you.

Cwagmire21
Cwagmire21

I like playing Words with Friends - why all the hate?

SLjimbolian
SLjimbolian

I'm certain this will be disastrous for Zynga.

MJ12-Conspiracy
MJ12-Conspiracy

Whatever, Zynga is just as evil as Activision, at least Zybga's CEO doesn't talk smack on a regular basis.....

hellpolice
hellpolice

Zynga the poseur company just like its hipster owner, lol I hope you go bankrupt and then prepare for your employees' retribution when the bubble burst. This is indeed, good news!

jbobbyjon
jbobbyjon

cashing in off facebook noobs who don't know theres better games out there

BAD-C0MPANY
BAD-C0MPANY

Zynga, the little kid in the Evil 4 (EA, Activision, Ubisoft) yet just as greedy.

AuronAXE
AuronAXE

I hope they crash and burn. I respect that everyone has a career and needs to make money, but I am a gamer who wants good games and I want to feel treated like a good customer. Zynga doesn't do that so out the window, I'm no corporate factor.

Janpieterzun
Janpieterzun

I would short this piece of crap. Any gamer knows these ios companies are shams, these games are crap time sinks. Nothing sustainable, its success a fluke. Because of the Niche aspect of the mobile market.

MrBBQ56
MrBBQ56

[This message was deleted at the request of the original poster]

MrBBQ56
MrBBQ56

[This message was deleted at the request of the original poster]

Evilbunz
Evilbunz

@jamyskis Next, Facebook is the only company in the history of the world that can target you directly to your specific needs. No advertising agency, not google, no company in history has or can do that. Facebook knows everything about you.... they can market you towards your needs right down to what color underwear you want. That right there is the most powerful tool ever made. No company in history has ever had that much information about you. If it was just a website to make friends and hang out it would have ended up like Myspace.

Evilbunz
Evilbunz

@jamyskis do you know what a tech bubble is? do you know what a bubble is first of all? Do i need to draw you a kondratieff cycle? Do not talk about which you have no idea about. Your opinion is based on false information. About Facebook.... let me just tell you how powerful Facebook really is then you might understand. It isn't just a website to chat with your friends. It is bigger then a lot of countries in the world with 800 million users. That is almost 3 times the size of USA. Not all of them are active but they are registered, not all American citizens are active in terms of their output to GDP.

Evilbunz
Evilbunz

To Gamespot..... Zynga CEO also sits on the board of Facebook. He also owns the mother of all patents in terms of social media, the reason why he sits on the board.

iluvOP
iluvOP

I dont know why Zynga creates so much hate in me. Maybe its because its made by greedy buttholes to exploit the weakness of foolish people.

J_Dangerously
J_Dangerously

Warning to investors (lol@getting financial advice in Gamespot forums): Zynga has more or less capped it's audience. Anyone who isn't already on Facebook probably won't be in the foreseeable future.

HollowNinja
HollowNinja

Actually, spOOoOOn, it IS over 9000. 900,000,000 is more than 9,000.

spOOoOOn
spOOoOOn

It's over 9000!!!!! oh wait.. It isnt.

gix47
gix47

bubble about to burst!

firehawk998
firehawk998

The media loves to hype how these social games are the new face of the industry and it would replace the gaming ones. I call ******** this social games are basically bubbles they cannot hold interest for casual gamers for a long time and when the bubble will burst Zynga will be crushed.

jamyskis
jamyskis

This is a tech bubble, and it's going to burst very, very nastily. Facebook traffic and interest in social media in general is declining at a rapid pace, and when Facebook starts going downhill, it's going to take Zynga with it. As some people have said, there are very few hardcore Facebook gamers. The majority spend perhaps just a few days playing a certain game, and very few of them will be compelled to spend money on them. As soon as money becomes a necessity for a game, they just move on to the next game.

nurnberg
nurnberg

I can't believe how many people waste their money into these non-games.

Khoo1992
Khoo1992

The bubble of social games will burst soon. Zynga is one of the causes, too many social games at one go are not good for the industry.

chibi-acer
chibi-acer

Financially, I can't deny that Zynga has been successful. But I don't see them being sustainable. They happened to have a few games that turned out to be ridiculously popular with the casual crowd. But that's a pretty fickle bunch of people to have as an audience. People who tend to play games in 5-10 minutes bursts will eventually move on to some other fad, and there's no guarantee the next one will be developed by Zynga. It's not what I would consider a safe investment.

Death_Blade_182
Death_Blade_182

[This message was deleted at the request of the original poster]

flipin_jackass
flipin_jackass

I don't get it, their Sept quarter had a net income of $13 mil, but that experienced a drop of 43%... so their 'normal' quarter would be, for simplicity, ~25$ mil; Multiply by 4, that's $100 mil per annum. Doesn't compute to a $9 billion valuation (and definitely not $14 billion). Maybe I learned it wrong in business class, but I thought that average business multiplier is from 3 to 6.... not 90 times it's net income. wtf?

params7
params7

@Barighm : And how has growth of casual..I'll say FB gaming hurt traditional gaming? They both do not compete with each other. The same people who play Zynga's games would probably never go out and buy a dedicated gaming console. Internet free flash gaming sites have more to fear from Zynga than Sony, Nintendo or Microsoft. And lets not forget its Activision's CoD that holds several sales records spanning across all entertainment mediums that none of Zynga's games can think of touching in terms of revenue.

params7
params7

@James00719 I think the billions are talking about the value of the company. The IPO is for 900 million (100 mil shares at approx 9$).

Barighm
Barighm

They got all that money from casual gaming? Wow. Anyone who thinks traditional gaming has nothing to fear should read this article.

Chargrilled
Chargrilled

avoid anything by zynga and their iap heavy, casual-centric tripe!

James00715
James00715

Reuters: "Based on a fully diluted share count of 904 million, which includes existing shares and stock options, the IPO price values Zynga at $7.7 billion to $9.04 billion." Unless I am missing something, $9.04 billion does not equal $900 million. Perhaps you mean 900 million shares as this quote states?

params7
params7

Please nobody buy their shares.

Rocker6
Rocker6

Zynga,a thing that represents everything that is wrong with gaming,I want to see it BURN!