News
Marketing can change the world

Finance giants lose big bucks on Zynga IPO gamble

Some big names in the world of finance will be starting the week with a sore head as Zynga's IPO looks set to value the company at around $9 billion.

FarmVille: popular Facebook game

A number of Wall Street titans are are facing paper losses of 29% or more on investments they made in the developer of Facebook games such as FarmVille and CityVille earlier this year, according to the Wall Street Journal.

At mid-year, the IPO was expected to reflect a $20 billion valuation. In August, Zynga itself obtained an outside valuation of $14 billion, says the WSJ, quoting disclosure materials.

These materials filed in connection with the IPO planned later this month reveal that mutual funds run by Morgan Stanley invested $75 million in Zynga preferred shares in February at a price of about $14 per share.

That's around $4 more per share than the figure of $8.50 to $10 a share that Zynga said on Friday it might price its IPO at .

Other mutual funds that invested in the same early Zynga financing, says the WSJ, include Fidelity Investments, which invested $82 million, and T. Rowe Price, which invested $72 million.

Representatives for the funds declined to comment to the WSJ.

LinkedIn shares are 38% below their peak after their IPO. Groupon, which went public last month, has been trading 28% below its offering price.

But Morgan Stanley, Fidelity and T. Rowe Price, who made pre-IPO investments in that company,are still showing a gain of more than 100%.

Zynga's IPO is expected to be priced, on Dec. 15 and the shares are expected to begin trading next day.

NY

Noel Young

Former editor of Sunday Mail in Glasgow and Group Managing editor of Daily Record and Sunday Mail. Now Boston-based US correspondent for UK newspapers including Daily Mail, Mail on Sunday and Sunday Post. Material also syndicated by Edit International in Florida. US editor for The Drum.

All by Noel