Farmville creator and social games overlord Zynga has announced a stock market flotation, which looks set to make it one of the biggest games companies in the US by stock market value.
A stock market flotation is the process of putting up a portion of your shares for public sale on the stock market. Right now, Zynga plans on selling 100 million shares, equal to 14.3% of the company, at the price of $8.50 to $10 per share.
This would make Zynga’s IPO (initial public offering, or stock market launch) a whopping $9.04 billion, placing the company shoulder-to-shoulder with juggernauts such as Electronic Arts and Activision Blizzard.
Despite the hefty sum, Zynga’s filing two weeks ago was actually $14.05 billion, but the games maker has since slashed the price 30% to account for unpredictable stock markets. Zynga has lowered IPO expectations after other internet firms’ listings had a disappointing launch, including LinkedIn and Groupon.
If there was any doubt about the social gaming market, it can now safely be put to rest. Zynga makes 90% of its money through Facebook alone. Using a free-to-play model, Zynga’s games produce revenue through the sale of add-ons such as vehicles, buildings and weapons which can be used in their games.
Zynga’s listing on US technology exchange NASDAQ has been handled since June by investment and securities powerhouses Goldman Sachs and Morgan Stanley.
With the stock market being a volatile arena there are no guarantees for Zynga, but an already lowered IPO valuation of $9 billion shows the social gaming firm is well established as a force to be reckoned with.