Zynga is hoping to raise more than a billion dollars when it goes public. The company, which runs Facebook games such as Farmville and Mafia Wars, is set to become the third most valuable games producer in the US.
The company has made a regulatory filing that says it plans to issue the public stock as soon as practically possible. It intends to issue 115 million shares to the public at a price of between $8.50 and $10 a share.
Analysts say the strategy appears to be going for volume rather than price, apparently learning from a quick fall in the stock of Groupon after its market flotation earlier this year. The Zynga issue will represent 14% of the company’s total stock, meaning that if it gets the $10 price, the company will be worth around $7 billion on paper.
That would put it a little behind Electronic Arts and roughly half the value of Activision Blizzard, the two most valuable gaming firms at the moment.
The filing also reveals that the company has taken in $828.9 million in the first nine months of this year, with a net profit of $30 million. It now has around 6.7 million paying customers, out of a total of around 54 million who play on an average day. Zynga says it expects this to continue to be a low proportion as its system needs large number of players to work most effectively, even if they don’t spend any cash. The revenue also includes money from advertising.
With such filings also required to list any significant risk factors, Zynga has been forced to formally acknowledge what is obvious to anyone who gives it any thought: if they fall out with Facebook, they are screwed. The filing notes that “substantially all” of Zynga’s revenue is generated via Facebook, and that it’s already suffered from Facebook introducing its credit scheme for in-app purchases, lowering revenue for developers. It also acknowledges that if Facebook has site problems, Zynga will in turn suffer.