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Zynga Files to Raise $1 Billion via IPO
- ashamedlion 15y agoThe tech IPO floodgate truly has opened. This is like the 5th high profile IPO within the past few weeks.
- nckpark 15y agoIndeed, but this time someone is actually making a profit! That's a refreshing change.
- zacharycohn 15y agoI'd put a lot more on this than I would on Groupon. Zynga is profitable, scalable, and has a huge amount of dedicated fans - three things Groupon doesn't have.
- tatsuke95 15y agoThere have been 64 internet stock IPOs so far this year.
- deleted 15y ago[deleted]
- Liu 15y agoMaybe in Farmville cash...
- lallysingh 15y agoHey, let's be careful. At this rate it may actually become real currency.
- hugh3 15y agoI'd invest in Farmville cash before I'd invest in bitcoin!
- ahi 15y agoA much better article. Techcrunch is useless. http://online.wsj.com/article/SB10001424052702304447804576414111297459234.html http://online.wsj.com/article/SB1000142405270230444780457641... heh. Just realized the wsj article is 2 days old. Still better than TC's.
- bproper 15y agoYeah - why do TC articles end up as #1 on big breaking topics? They have nothing to add but snark.
- dstein 15y agoUnfortunately there's no way to downvote articles, so I usually just click the flag link under TC headlines.
- nikcub 15y agothere is zero snark in that post - just the s1 summarized
- ignifero 15y agoBecause of the emotionally provocative titles they choose.
- mlinsey 15y agoLots and lots of people here read TechCrunch. It's still essentially the paper of record for the startup scene. Consequently, when major interesting news breaks, several different people see it on TechCrunch first and all submit the article at about the same time. The duplicate submissions count as upvotes, and just 5-10 of these immediately after an article breaks is enough to get a submission near the top for a short period of time, during which it's the first link on the story people coming to the HN frontpage see, so it gains momentum. Honestly, I don't think TC is as bad as you characterize it, especially when it comes to breaking news (as opposed to high-level commentary). They've done a good job at breaking several big stories in the past year, even though I disagree with a lot of the more opinion-type pieces.
- 15y ago
- markbao 15y agoHmm... $90.6 million of net income in 2010? Can it sustain the growth to justify a double-digit billion market cap?
- maukdaddy 15y agoAbsolutely not. A key quote from the WSJ article: "That could value the game publisher, which had about $850 million in revenue last year, at roughly the same as the two biggest videogame publishers—Electronic Arts Inc. and Activision Blizzard Inc.—combined."
- Lewisham 15y agoThis is bonkers, because Activision Blizzard alone are making money hand over fist with WoW. There's no way that Zynga is worth that much.
- nostrademons 15y agoThe market for casual games is potentially much, much larger than the market for games like WoW. WoW targets college students and young adults who identify as gamers. Farmville targets middle-aged housewives. There are many more of the latter than the former, and they control many more dollars in spending decisions.
- kayoone 15y agostill WoW alone rakes in more money than Zyngas complete Revenue in 2010. Top AAA games generate more than 1 Billion in revenue (GTA Series for example). Dont undererstimate the gaming market.
- nostrademons 15y agoI'm not, but I'm also not underestimating the casual gaming market. To me it seems like a classic disruptive innovation: leverage a new technology to serve the low end of the market better, vastly expanding it, and then slowly ramp up quality until you've eaten the whole market. Stocks tend to be valued based on future earnings more than present earnings - after all, if you know that a company will be making more money next year, it's rational to buy their underpriced stock today and wait for it to appreciate.
- DevX101 15y agoA few media outlets including http://twitter.com/#!/TheNextWeb http://twitter.com/#!/TheNextWeb have claimed this means Zynga has a $1 Billion valuation. That's not true. Zynga is RAISING $1 billion. Some of the stock will not be available on the IPO day.
- hugh3 15y agoSo... how much of the company are they going to sell? Or haven't they announced this yet either? A $1 billion valuation would seem awfully low, since last I heard they have multiple hundreds of millions (possibly half a billion) in revenue. I personally have concerns about the long-term sustainability of their business model, but I'd expect a valuation much higher than this. Personally I won't invest. Too evil for my tastes.
- 18pfsmt 15y agoWhile I don't know specifically how much equity they intend to sell, investment banks typically like to make their IPOs between $12-14/ share. Given their last VC round was funded by Morgan Stanley and T. Rowe Price [1], I would guess they will be shopping the deal among their investors to gauge interest, and then price the shares as they see fit. [1]http://www.crunchbase.com/company/zynga http://www.crunchbase.com/company/zynga
- deleted 15y ago[deleted]
- maukdaddy 15y agoI wouldn't touch this IPO for one major reason - reliance on FB. In fact, the first risk that Zynga lists in the filing docs: "If we are unable to maintain a good relationship with Facebook, our business will suffer,” according to the filing. “Facebook is the primary distribution, marketing, promotion and payment platform for our games."
- zacharycohn 15y agoBut they have been moving away from their complete reliance on Facebook. It will always be a (major) distribution channel, but they've moved onto iPhone/Android apps too, and I'm sure they're planning on diversifying further.
- maukdaddy 15y agoYes, but the majority of the 1bn+ valuation rests on FB. That's exactly why it is listed first in the risks section.
- suking 15y agoThey're RAISING $1bn, not a 1bn valuation. More like 15-20bn val.
- namityadav 15y agoThey're raising $1B .. their valuation is going to be in $15B - $20B range
- ChuckMcM 15y agoI agree in principle on the risk, but compared to the GroupOn S-1 it looks like the proverbial dogshit-into-gold product [1]. So the interesting thing is if they can plug into Google+ and do other things to keep usage up they will continue to print money. That is not as disruptive as what other folks are asking you to believe they might have to do to survive. [1] http://techcrunch.com/2010/10/05/stupid-questions-vcs-ask/ http://techcrunch.com/2010/10/05/stupid-questions-vcs-ask/
- 15y ago
- nostrademons 15y agoIt's ironic that they're IPOing before Facebook...
- aninteger 15y ago"As of March 31, Zynga had 1,858 employees -- 64% of whom have been there less than one year. More than 90% of Zynga's staff has been with the company for less than two years." Has any other company in recent history grown this fast?? Did Facebook or Myspace grow this quick?
- skimbrel 15y agoThe story I've heard to explain this is that it isn't the growth rate so much as the turnover. I have friends who joined Zynga straight out of college (Berkeley) and are looking around for something new a year later, now that they have some vesting in their options. It really doesn't sound like a pleasant place to work -- I was told eighty-hour weeks are the norm. That said, Groupon has something like 8,000 employees, most of whom were hired in the last two years.
- skizm 15y agoI really enjoyed the quote from founder Mark Pincus: " Games should be accessible to everyone, anywhere, any time; Games should be social; Games should be free; Games should be data driven and; Games should do good." I hope more game developers take this (especially the last point) to heart. Too many game developers are latching onto publishers who demand games on an unreasonable timeline. To give one example, Valve is a testament to how putting the appropriate amount of time into development of a game produces great results (not to mention an amazingly loyal fan base). That said I do understand game companies need money to produce these games but I do think a culture shift is in order and publishers need to realize great games take time. I think they undervalue how much more money a great game make than a good game. Also nothing builds more hype than anticipation!
- breck 15y agoHow did brad Feld get 30M shares? Just curious.
- ozziegooen 15y agoI'm not very familiar with corporate management salaries, but these kind of seem silly. Example: Mark Pincus made a 300k salary in 2010, what may be a 100% annual cash bonus, plus quarterly bonuses of "$22,500, $0, $75,000 and $37,500, "