San Francisco-based Zynga Inc., which creates online games for mobile devices and sites such as Facebook, plans to file an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC) expected to be as early as today, reports CNBC.
Some of Zynga’s most popular social gaming offerings include Farmville, Cityville, Frontierville, Mafia Wars, Zynga Poker and the new Empires & Allies. As Facebook’s largest games publisher, the company reports more than 215 million monthly users.
Zynga acquired Austin-based Challenge Games last year for around $20 million and CNBC reports the company is attempting to raise “between $1.5 billion and $2 billion” as part of the IPO, suggesting that the company has a valuation of between $15 and $20 billion and is looking to sell around 10% of its shares. The proposed valuation would be much higher than the $5 billion valuation attributed to Zynga last year and would position the company to be bigger than Activision and EA combined. PopCap Games, another maker of Facebook games, said it plans to rollout an IPO by the end of summer.
The actual value of the company is debatable, as social media companies are launching IPOs left and right, such as LinkedIn and Groupon. According to Sterne Agee analyst Arvind Bhatia, Zynga’s annual revenue was estimated at $1 billion as of a few months ago and would make Zynga’s yield higher than that of LinkedIn’s annual revenue. Online radio firm Pandora Media Inc. was able to raise the proposed value of the company’s IPO by almost half but slipped two days after and lost its gains by 20%. Groupon also launched an IPO this month looking to raise $750 million. Facebook and Twitter are also reportedly flirting with making IPO offerings.
Financial firm Morgan Stanley is Zynga’s lead underwriter with Goldman Sachs, Bank of America, Merrill Lynch, Barclays and JPMorgan also expected to underwrite. Zynga completed $180 million in financing last year, which is projected by to make $600 million in annual revenue. The firm hired Austin-based Market Zero founders Jason Wang, Timothy Sullivan, Amir Elaguizy, Nir Leibovich and Gustavo Abdala in April as well as executives from Cisco and Yahoo.
The global video gaming industry is projected to be around $60.4 billion.
