Zynga gets real, aims for third place among EA, Activision Blizzard

Zynga sure talked a big game earlier this summer with an estimated valuation of anywhere between $11.5 and $20 billion, but perhaps it spoke too soon. According to its most recent S-1 filing with the US Security and Exchanges Commission (SEC), Zynga now expects to value at between $5.9 and $7 billion when it goes public on the Nasdaq as early as Dec. 12. However, the company looks to initially raise a bit more than it previously expected: $1.15 billion when it debuts under the ticker "ZNGA".

The company still expects to price its shares between $8.50 and $10, with 699.4 million total shares. While the company does plan to raise more than previously reported, this brings the FarmVille maker back down to reality somewhat. The four-year-old company originally expected to be worth more than even Call of Duty publisher Activision Blizzard's $14 billion and EA's $7 billion. But with a projected valuation--the expected total worth of a company based on several factors--starting at $5.9 billion, neither will happen.

Zynga lowered the valuation due to poor market conditions, according to Inside Social Games. It appears that the company's IPO roadshow is already underway, as Zynga has posted a 30-minute video detailing the entire presentation. Within the presentation, Zynga focused on its growth in the mobile arena, with 11.1 million daily players across iOS and Android, among other things. Check it out right here.

[Via Inside Social Games]

[Image Credit: Fiscal Times]

Do you think Zynga can at least tie with EA when it goes public? Would you ever invest?

Zynga profits plummet 90 percent, raises questions about imminent IPO

Will the big show still go on? That's what many wonder, as Zynga just revealed in an updated regulatory filing that its profits dipped by 90 percent in the June quarter, thanks to increased spending and a lack of major game releases earlier this year, Reuters reports. According to the news service, this raises questions as to whether the company can sustain growth ahead of its long-awaited IPO (initial public offering).

Zynga's net income took a nose dive to $1.4 million from $14 million a year earlier, and its net profit plummeted over 90 percent in three months from $16.8 million in March of this year. Reuters chalks this up to the fact that the filing shows that the FarmVille maker's expenses rose $149 million compared to a year earlier, and $59 million alone from the previous financial quarter.

We'd imagine a major chunk of those expenses are thanks to the 14 companies Zynga gobbled up in the past year. It's also worth noting that the developer didn't really release any major Facebook games in 2011 prior to Empires & Allies. (And no, we're not counting FarmVille English Countryside.) Since then, however, the company has been on a frenzy, launching three more Facebook games this summer: Words With Friends, Pioneer Trail and recently Adventure World.

This news speaks volumes to the fact that Zynga has reached a point where it constantly needs to produce in order to sustain its meteoric growth, and more importantly for them right now, the faith of investors. Since the company's last filing, Zynga conducted a third-party analysis that estimated the probability of an IPO at 75 percent. This is down from the 80 percent probability reported in Zynga's previous filing.

In other words, it looks like the anticipated Zynga IPO could be delayed, just as previous reports suggested, to wait for improved market conditions. However, EA is gaining on the company with The Sims Social, and fast. According to AppData, EA and Playfish's game has just about 1.6 million fewer daily players than CityVille's 12.9 million.

Do you think Zynga has anything to worry about, given the news? Would you ever invest in Zynga if given the chance? Sound off in the comments. 1 Comment