Hypo Venture Capital Zurich Headlines: Zynga Reportedly Preparing Public Offering Of Stock

By Author: Hypo Venture Capital Zurich
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Alex Pham
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/05/zynga-reportedly-preparing-public-offering-of-stock.html

Zynga, the San Francisco developer of social games such as Mafia Wars and FarmVille, is preparing to file an initial public offering of stock this week or next, according to the Wall Street Journal’s All Things D blog.

Zynga’s last round of funding valued the company at $10 billion. But a stock offering could allow Zynga to harvest a substantially higher valuation, according to All Things D, citing anonymous sources.

Other technology IPOs have done well this year. Demand Media in January enjoyed a 33% pop in share price on its first day of trading. Shares of LinkedIn, a social network aimed at executives and job seekers, soared 109% on its first day of trading last week, giving the Bay Area company an eye-popping $9-billion valuation. And most recently, Yandex, nicknamed “Russia’s Google,” clicked up 55% on its first day out Tuesday on the Nasdaq.

The enthusiastic investor reception has laid the groundwork for other expected technology IPOs, including ...
... Facebook, Pandora, Groupon and Zynga.

Calls to Zynga were not immediately returned.

The company is the largest developer of Facebook games. Its 55 games and applications draw nearly 248 million players a month, according to AppData.com, a site that tracks usage on Facebook. By comparison, the second-largest game developer on Facebook, Electronic Arts, has just 36.6 million monthly players.

Social games are largely free to play. They make money by selling gift cards that can be redeemed for virtual goods used within the games. They also make money by promoting the products and services of other companies, either within the game itself or through “offers” that give consumers game credits in exchange for signing up for credit cards or buying merchandise from sponsors.

Zynga does not release its financials, but the company is said to be highly lucrative, as a small proportion of players shell out a disproportionate amount of money on game credits.

eMarketer, a market research firm, esimated that revenue from social games would hit $1.09 billion this year in the U.S., up from $856 million last year. About 60% of the revenue comes from selling virtual goods, with the rest coming from ads and promotions, according to eMarketer.