Zynga: Is FarmVille's maker the next hot IPO?

Zynga, the company behind hit Facebook games like FarmVille and Mafia Wars, may tap investor demand for anything and everything related to social media

Farmville's wild popularity on Facebook, along with the recent rash of successful tech IPOs, has reportedly inspired Zynga to file an initial public offering by early June.
(Image credit: CC BY: tarikgore1)

Hoping that Wall Street likes its products as much as Facebook users do, Zynga — the company behind hit games such as FarmVille and Mafia Wars — is poised to file for an initial public offering by the end of next week, says Kara Swisher at All Things D. Investors have been eager to buy into social media companies, and the stock of last week's IPO darling, LinkedIn, remains around $95 (double its initial price), putting its value at around $9 billion. Zynga's IPO will likely value the video game maker at more than $10 billion. Can Zynga capitalize on IPO fever even more phenomenally than LinkedIn?

Yes, the IPO "floodgates" are opening: The success of the LinkedIn IPO "changed everything" and has other companies speeding up their IPO plans, says Paul Kedrosky at Bloomberg View. If Zynga gets the same treatment, it could even get valued "in excess of $20 billion" — yes, absurd, but within "the realm of reason." These social media IPOs will keep coming "as bankers and venture capitalists search their pockets, mattresses and everything else to find issuable shares in anything. And I mean anything."

"Reports that Zynga will file for IPO open floodgates further"

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But Zynga is also a special case: Zynga is at the forefront of the "casual game revolution" that has "brought in millions of players who are otherwise uninterested in hardcore console and PC games," says Evan Narcisse in TIME. Though Zynga's games are free to play. the company "earns money via microtransactions" that unlock virtual goods or gaming rewards. Zynga says it has some 250 million users a month, and it's looking to grow its mobile gaming business. These factors combined could help Zynga overtake Activision and EA as the biggest videogaming company.

"Cash crop: 'FarmVille' maker Zynga preparing for IPO?"

And it's actually making a profit: Unlike other Web 2.0 companies which have "untested business models and little in the way of profits," Zynga reportedly made $400 million in 2010 and is on course to generate $1.8 billion in revenue this year with $630 million in profits," says Garett Sloane in the New York Post. It has become "a cultural force." It may not be ready to file for an IPO by next week, but expect it to go public by Labor Day.

"IPOville for Zynga"

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