December 16,2011 : Management ambitions to raise a billion dollars values the social gaming company at $7 billion
Social gaming giant Zynga's forthcoming and keenly anticipated IPO moved forward Thursday with the company pricing its offering at $10 a share – at the top end of analyst's expectations, according to the New York Times.
The offering – the largest for an American Internet company since Google – raised $1 billion, and values the company at $7 billion.
“This is a revolution,” one broker's analyst proclaimed. “Social is revolutionizing the gaming industry and it’s really the early days of a brand new medium.”
At $7 billion, Zynga is set to start trading at seven times sales, with investors betting on the potential for profits.
Founder Marcus Pincus is regarded as a pioneer for identifying, investing in and exploiting the social gaming and the ‘freemium' business model, in which playing is free but players have the option to upgrade features by spending money.
Major investors in the booming company include top venture firms like Kleiner Perkins Caufield & Byers, which has an 11 percent stake, and companies led by Yuri Milner, a Russian billionaire, which hold 5.8 percent stake. Google, which invested in Zynga in 2009, owns 4.1 percent.
Analysts told the New York Times that a dominating presence on Facebook was no longer sufficient, and that Zynga needs to develop a strong mobile presence.
“Mark Pincus was one of the first who really saw the opportunity of virtual goods,” said one. “But it’s not just about Facebook anymore; they have to figure out mobile, too.”