Social netowrk game developer Zynga on Friday filed for its impending initial public offering, seeking to raise as much as $1 billion in the largest US Internet IPO since Google went public in 2004. According to the filing, Zynga will offer 100 million shares at a price of $8.50 to $10 a share, with the high end of that range valuing the San Francisco firm at about $7 billion.
Zynga had initially planned to launch an even larger IPO, but scaled back its expectations after watching shares of other Internet companies like Groupon and Pandora fall sharply after the initial buzz faded from their IPOs launched over the last few months. Zynga's IPO will make available about 14 percent of the company's common stock, a much larger portion than other Web firms that have gone public this year.
The top end of Zynga's announced price range would value the company at 6.8 times its total sales over the last twelve months, a more modest valuation than those sought in the Groupon and Pandora IPOs. The company plans to sell all of the 100 million shares in the offering, and expects to net about $889 million in the sale, adding to cash reserves that were at just over $600 million as of September 30th. The company has also included an over-allotment option of 15 million shares in the IPO, with investors Avalon Ventures, Foundry Group and Institutional Venture Partners each selling about 2.5 million shares, and Union Square Ventures offering another 2.2 million shares.
Founded in 2007, Zynga makes a variety of games and applications for social networking platforms like Facebook. Zynga's games are free to play, but the company makes money by selling virtual goods for the games such as a townhouse in its popular “CityVille” game and a shipyard to players of its “Empires and Allies” offering. According to the IPO filing, around 6.7 million of the company's players were paying customers at the end of September, up from 5.1 million at the same point a year earlier.