Zynga Seeking Biggest Web IPO Since Google

Zynga Inc. is seeking to raise as much as $1 billion in its initial public offering, more than any Web IPO since Google (NASDAQ:GOOG).

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The company responsible for “FarmVille” is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. The high end of the range would value the San Francisco-based company at $7 billion.

Zynga has originally planned for an even larger IPO, scaling back after Internet properties from Groupon (NASDAQ:GRPN) to Pandora (NYSE:P) aimed too high, quickly sinking lower than their initial offering price.

Zynga is the biggest developer of games for Facebook, which could raise $10 billion in an IPO next year that would value the world’s largest social-networking site at more than $100 billion. Google raised $1.9 billion in its initial public offering in 2004, including an over-allotment option.

Zynga is hoping to capitalize on the popularity of social networks and virtual goods. The company creates free online games, then makes money by selling virtual goods, such as a townhouse in “CityVille” or a shipyard in “Empires & Allies.”

About 6.7 million of Zynga’s users were paying customers in the first nine months of the year, up from 5.1 million the year earlier. In that time, revenue more than doubled to $828.9 million. Lazard Capital Markets believes the worldwide virtual-goods market will more than double to $22.5 billion in 2015 from $9.27 billion last year.

As it expands, Zynga will be looking to reduce its dependence on Facebook users. In the third quarter, 93 percent of Zynga’s revenue was generated on Facebook.

Adding more mobile games is part of Zynga’s plan to diversify. The number of daily users on mobile devices increased more than 10-fold from November 2010 to September 2011, reaching 9.9 million. By October 2011, that number was 11.1 million.

Zynga has hired Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) to manage its IPO. Zynga shares will trade on the Nasdaq under the symbol ZNGA.

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