Zyn ga, the online gaming company that lets users tend virt ual cattle on imag inary farms, hopes to raise at least $1 billion in one of the year’s most eagerly anticipated initial public offerings.The float will be the latest to test the app etite of investors for social net working stocks. It is also likely to make Mark Pin cus, Zynga’s chief executive, a paper billion aire only four years after he founded the business.
Other backers who will enjoy sig nificant pay days include the LinkedIn founder Reid Hoff man and Peter Th iel, who was also an early investor in Facebook.
Zyn ga, which filed paper work for the float yesterday, said that it ex pected to raise about $1 billion but it could increase that figure. There is wide spread speculation that the company is aiming to sell up to 10 per cent of its shares at a price that would value the company about $20 billion. Zynga’s productions include Farm
Ville and City Ville, two of the most popular games on Facebook, the dominant force in social networking. Unlike many of its peers, Zyn ga is thought to be profitable from selling virtual goods that improve gameplay, such as pretend animals, to its customers.
The company has 272.5 million monthly active users, according to App Data, which measures web traffic. It is one of Facebook’s largest advertisers and shares its profits with the social network as part of a deal that analysts believe could be worth $500 million to Facebook this year.
The relationship with Facebook has been fraught, with the two sparring over how Zynga customers would pay. Eventually Zynga submitted and adopted a currency dubbed “Facebook credits” that users can spend inside its games. Of the top five games played by Facebook members, four were developed by Zyn ga. City Ville, the most popular, has nearly 90 million users.
Online video game revenue is expected to reach $18 billion by the end of the year and $26.9 billion by 2015, according to DFC Intell igence, a market research company.
Investor fervour for social networks was highlighted in May when shares of Link edIn, a service that connects professionals, nearly doubled on their debut in New York, despite the company warning that it expected revenue growth to slow and it did not expect to make a profit this year. The performance evoked memories of the exuberance that led to the dot-com crash.
Pundits suggested that Linked In had benefited because the real object of investors’ desires — shares in Facebook — are all but unobtainable until it floats. From the handful of shares in Face book traded on private exchanges, the company has been valued at between $70 billion and $80 billion.
No comments:
Post a Comment