Hosed: Zynga Already Watering Down Shareholders
The social gaming company Zynga (NASDAQ:ZNGA) filed with the SEC on Wednesday for a $400 million stock offering, with all the stocks to be sold by current shareholders. Investors in Zynga are planning to sell the stock in the near future to reduce future volatility of the company’s stock price.
The company’s largest holders are CEO Mark Pincus and a host of institutional investors, including Kleiner Perkins, Institutional Venture Partners, Union Square Ventures, Foundry Venture Capital, Avalon Ventures, Capital Research Global Investors, Morgan Stanley (NYSE:MS), and JPMorgan Chase (NYSE:JPM). Zynga did not specify which holders intend to sell shares in the offering.
Insiders at Zynga are subject to a 156-day lock-up period that expires May 28. Zynga appears to be trying to avoid the massive selling pressure that can bring down share prices when lock-ups expire by filing a registered offering. On December 15, Zynga went public at $10 a share. This morning, Zynga fell 13 cents from yesterday’s close, or 0.9 percent, to $13.25 a share.