Game designer Zynga, which makes the highly successful Farmville game for Facebook, has announced plans for a stock market flotation. Reports suggest the firm could raise as much as $925m (£589m) from the listing. Zynga had originally planned a larger IPO, scaling back after Internet companies including Groupon Inc. and Pandora Media Inc. sank following […]
Game designer Zynga, which makes the highly successful Farmville game for Facebook, has announced plans for a stock market flotation. Reports suggest the firm could raise as much as $925m (£589m) from the listing. Zynga had originally planned a larger IPO, scaling back after Internet companies including Groupon Inc. and Pandora Media Inc. sank following their debuts this year.
Facebook may raise about $10 billion in an IPO next year that would value the world’s largest social-networking site at more than $100bn.
Google raised $1.9bn in its 2004 IPO, including an over- allotment option.
Zynga plans to sell 100 million shares, or 14.3% of the company, at $8.50 to $10 per share according to a regulatory filing made on Friday.
The valuation would make Zynga one of the biggest US games co
mpany by stock market value, placing the firm alongside industry giants Electronic Arts and Activision Blizzard.
Unlike its competitors, Zynga does not charge for its games but makes money from selling add-ons such as virtual weapons, vehicles or buildings which can be used within the games.
About 6.7 million of Zynga users were paying customers in the first nine months of the year, up from 5.1 million in the year-earlier period, according to the filing. Revenue more than doubled to $828.9 million. The worldwide virtual-goods market will more than double to $22.5 billion in 2015 from $9.27 billion last year, according to Lazard Capital Markets.
Zynga earns over 90% of its revenue through Facebook according to its own figures.
In October the firm set up an initiative called Project Z which is designed to remove the firm’s dependency on the social networking site.
Zynga has been in talks with Goldman Sachs and Morgan Stanley since June to manage the listing process on the US tech exchange, NASDAQ.
The firm has already reduced its expectations for the IPO after recent listings of other internet firms performed less well than planned.
Shares in the Social networking site LinkedIn fell below their May offer price after a 180 day lock-up period.
Discount voucher website Groupon listed on the Nasdaq exchange at the beginning of November and its shares are now trading below its initial offer price.
On Friday, the Office of Fair Trading (OFT) launched an investigation into Groupon after the firm broke UK advertising regulations 48 times in 11 months.
