Zynga Opens at Top of IPO Range

Posted by - Friday, December 16th, 2011

On Friday, social media game company Zynga Inc. (NASDAQ: ZNGA) began trading publicly at $10 per share.

The company raised $1 billion in its IPO, the most an Internet company has raised since Google (NASDAQ: GOOG) brought in $1.9 billion in 2004, Bloomberg reports.

Zynga expected trading between $8.50 and $10.  In its IPO, it sold 100 million shares at the high end of the range.

Zynga makes Internet games that are especially popular on Facebook, such as “FarmVille,” but the company has also made its way into Apple’s (NASDAQ: AAPL) world with popular iPhone games like “Words with Friends.”

The company’s products continue to gain popularity, and within the past year, according to Bloomberg, sales doubled to $829 million.

And it will be offering 14% common stock, the article reports, a higher amount than some other Internet companies that sell less to heighten demand.

The IPO price has placed the value of the company at around $7 billion, and the future looks bright for the market.

Richard Greenfield of BTIG LLC told Bloomberg:

“You’re definitely going to see more competition…On the other hand, I think it’s also going to bring more people into the overall social gaming space.”

And as more products emerge to provide a portal for Internet games, including smartphones and the increasingly-popular tablets, demand is set to go nowhere but up.

But could Zynga be shooting a little too high for IPO? Some other companies that have recently gone public seemed to make this mistake, watching their high prices drop just as quickly.

Pandora (NYSE: P), for example, saw a 63% rise in price on its first day of trading, the Christian Science Monitor reports, a spike that didn’t last long.  After trading at $26 per share, the price soon dropped to $17.42, says the article.

Pandora is now trading at $10.60.

LinkedIn (NYSE: LNKD), meanwhile, saw a good initial trading day, rising from $83 at opening to $106, but has fallen considerably since then, now trading at $64.10.

And some analysts have feared the company’s valuation was just too high—it could be the result of a growing tech bubble.

So even if Zynga makes out well in its first day of trading, there’s no guarantee the price will continue to rise.

At 11:25 on Friday, Zynga traded at $10.13, up 1.29% from opening.


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