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Zynga Seeks $1 Billion In IPO
bizwriter writes "Zynga finally filed its IPO paperwork today, as it wants to raise $1 billion. And while the reports of how well it did were significantly overstated, this is a company that still makes significant revenue and profit. If you thought that LinkedIn's IPO was hyped and hyper, Zynga's going to put that all to shame."
It doesn't really matter what the company's value is. Stock price is completely and totally unconnected to any kind of company value or profit. Stock price is purely a measure of how much people are willing to pay for a "share" of a company. It used to be that people bought stock because they pay dividends, but now few stocks pay any dividend, and people are simply gambling that one day in the future people will pay more for the "share" than they are willing to pay now. All of the analysis into a stock's "value" are about as useful as "analyzing" numbers on a roulette wheel.
I don't respond to AC's.
What we actually have here is new companies filing for IPO's which allows the company to raise capital to expand and generate revenue. Many companies in other sectors launch IPO's long before they are profitable. Consider that we have seen relatively few tech IPO's in the last couple of years. Maybe this should be taken as a sign that there is some growth happening? I thought that before we had a bubble there had to be a build up... After all in the first bubble there wasn't a good frame work for many to generate revenue. Now several forms have been developed and new applications are becoming apparent. This increases the value of tech companies and the odds of new ones becoming profitable. On the other side it could be seen as entrepreneurs going for a mad dash to cash out on the equity they have developed in a scam-like fashion (eg: leaving shareholders with more or less worthless companies while cashing their stock options). I think that is largely how it is perceived in the general financial community but it remains to be seen if this is warranted. It could be a self enforcing effect where financiers see potential signs of a bubble -> cut funding -> entrepreneurs are worried about loss of hard work -> issue IPO. Summary: Could be a little early to call a bubble though the US isn't out of the woods yet.
Does anybody know what the estimated market cap will be?
I'm sad that there's so much valuation in this virtual crap as opposed to investment in solid manufacturing or infrastructure, like solar and LED companies, probably becuase that's what I'm in. But some folks obviously think the relentless march to Idiocracy (buying shit in the real world to better play games with your friends in the virtual world???) in this country will be quite profitable, and they may be right.
I think the recent MySpace sale has shown that a company that makes games (though shaky) is nowhere near as volatiles as a company that relies upon its social network to fill its coffers.
A company that relies on the sales of games that rely on somebody else's social network is more stable?
I think if Zynga can separate themselves from their Facebook/Social Media reliance and their own past they'll have a chance of lasting 10+ years.
Linked-in has carved their niche as the professionals place to network. They may not have the seemingly limitless growth potential that a generic place like Facebook has, but I think their market is less likely to jump ship with the next new thing that comes out, and they have a well-defined target audience that they know for a fact has money.
The people that spiked Linked-In's IPO are the same people that spiked the first internet bubble and are the same ones that will spike Zynga's IPO, and will be the same ones jumping out windows when this bubble bursts: the ones that "play" the market.
Investing is not a game. It is just numbers and educated guesses based on those numbers. The people inflating these IPOs are just like the people in Vegas betting on black cause its "hot". To the pros they're either an annoying inconvenience... or a mark.
Your math would only be correct if it was issuing 100% of it's equity. It's probably issuing a tiny fraction.