Web 2.0s Next Big Thing, Zynga Moves Closer to IPO
Zynga Founder and CEO Marc Pincus recently told Vanity Fair, “I’m not looking to be famous for the amount of money I have, and it’s kind of socially awkward.” The Harvard Business Alum may soon be disappointed, as his latest start-up is reportedly inching closer to a public offering valuing the company at $10-15 billion dollars. CNBC reports that the San Fran based business, maker of popular interactive games such as FarmVille, Zynga Poker, and CityVille, is planning to file its IPO paperwork with the SEC sometime this week.
The company is looking to raise $1-2 billion through its initial offering, with investment banks Morgan Stanley (NYSE:MS) and Goldman-Sachs (NYSE:GS) signed on to lead the deal. The speedy filing means that Zynga could make its debut on public markets as early as September. With social media upstart Groupon also recently filing its SEC papers, and heavy weights Twitter and Facebook also talking IPO within the next year, Zynga may lead the second wave of Web 2.0 public offerings, which could be far more profitable for investors than the first.
In the past two months a slew of Web 2.0s biggest names, LinkedIn (NYSE:LNKD), Yandex (NASDAQ:YNDX), RenRen (NYSE:RENN), Pandora (NYSE:P), and others have entered the fray of public markets, starting talk of a brewing bubble in the social media market. LinkedIn fanned flames of the early bubble talk by exploding out of the gates in its debut, posting triple digit % returns on its first day on the market. Since then the company has receded substantially in ticker price, though investment banks and securities analysts are just starting to initiate coverage on LinkedIn, many vouching for the company with a “buy” rating. Pandora’s (NYSE:P) more recent debut was less well-received, with prices falling well below its IPO price in the company’s first week of trading. However this week, Pandora looks to be recapturing momentum from investors and is trading back above its IPO listing of $16/share.
What separates Zynga from many of its web 2.0 “growth” counterparts is the fact that the company is already profitable, by a wide margin too. reporting profits of $400 million in 2010. The former valley startup now employs 1,500 staffers in 13 offices with six international locations. The company is projecting revenues that will exceed $1 billion this year. Not bad for a guy (Pincus) who couldn’t land a banking job due to a self proclaimed lack of “respect for authority.”
As Zynga continues to grow, expect the company to meet competition from tech and gaming luminaries: Electronic Arts (NASDAQ:ERTS), Sony (NYSE:SNE), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Take-Two Interactive (NASDAQ:TTWO), Activision-Blizzard (NASDAQ:ATVI) and many more.
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