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."

Comments

Though High, Not Even Close to LinkedIn Hype

[eldavojohn]

If you thought that LinkedIn's IPO was hyped and hyper, Zynga's going to put that all to shame.

Okay so let's take a look at the two IPOs. From Slashdot's own summary of LinkedIn's IPO we have this fact about what the shares were trading at on LinkedIn's opening day:

That price values the company at over 30 times its 2010 revenue ...

So now that we can see Zynga's financials, we see that its revenues for 2010 were $600 million meaning that if the shares hold at exactly the price Zynga opens at, they will be valuing Zynga at 1 2/3 times their 2010 revenues. Now, of course, last year's revenue doesn't mean everything as growth, market cap, etc come into play. But that 1 2/3 times is substantially less than the ridiculous 39x amount that LinkedIn's IPO skyrocketed to. If the total trading volume's valuation goes from $1 billion to $23.4 billion in the first day of trading then we'd be approaching LinkedIn-levels of bubble hype. How exactly is Zynga going to "put that all to shame"? Are you in possession of some proof that the trading will once again go ape shit past $23.4 billion? 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.

Remember, some folks estimate that Farmville alone is now worth more than EA.

I hate Zynga with a passion and am convinced that Words with Friends has completely destroyed my Android phone's battery life (all the while showing me ads to improve my battery life) but I think they're a far better bet than LinkedIn. I've commented on Zynga's 7 Eleven partnership long ago and I think that market penetration is massive and gives them an upper hand that I cannot fathom how the competition will beat -- especially if that's an exclusive contract.

Re:Though High, Not Even Close to LinkedIn Hype

[econolog]

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.

Re:Though High, Not Even Close to LinkedIn Hype

[lotho brandybuck]

I'm not going to try to understand the whole prospectus, but if they're "raising" 1B, their total valuation will be over that unless the current stockholders want absolutely nothing for their shares. Somehow I doubt that's going to happen.

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.