Zynga is expected to public next week, raising perhaps as much as $1 billion. According to Bloomberg, it looks like the company has already filled orders on 100 million shares. The deal could actually be the largest tech offering since Google (Nasdaq:GOOG), which raised $1.67 billion in 2004.
Here’s a quick profile:
Background: Founded in 2007, Zynga is the top social-media gaming company on the Facebook platform. The games are all free, but the company generates revenue through advertising as well as the sale of digital items (say, a virtual pick or a
plow). Some of its titles include CityVille, FarmVille, Mafia Wars, Words with Friends and Zynga Poker.
From 2008 to 2010, revenue surged from $19.4 million to $597.5 million. For the nine months ended Sept. 30, 2011, revenue was $828.9 million.
To continue growing, Zynga is trying to move away from its dependence on Facebook by building its own gaming platform, which is called Project Z. The company also is significantly investing in mobile games.
Terms of the deal:
| Underwriters | Morgan Stanley and Goldman Sachs |
| Number of shares to be offered | 100 million |
| Price Range | $8.50-$10 |
| Ticker | ZNGA |
| Percentage of Stock Offered | 14% |
| Total Funding | $845M |
Financials:
| Item | Q3 2010 | Q3 2011 |
| Revenues | $170.7M | $306.8M |
| Net Income | $27.2M | $12.5M |
Valuation:
| Company | Market Value | Multiple of Sales for the trailing 12 months |
| Zynga | $7B | 6.8X |
| Electronic Arts (Nasdaq:ERTS) | $7.2B | 1.85X |
| Activision Blizzard (Nasdaq:ATVI) | $13.9B | 2.86X |
| Take-Two Interactive (Nasdaq:TTWO) | $1.2B | 1.25X |
Metrics:
| Metric | 2011 |
| Paying Users | 6.7M |
| Million Average Monthly Users (MAU) | 227M |
| Mobile Users | 9.9M |
A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.
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