15 December 2011 - 11:02pm | posted by | 0 comments

Zynga goes for IPO at $10 a share . . . but will it hit a wall after the launch?

FarmvilleFarmville

Zynga, the online games company known to the world though its berth on Facebook, has pitched the stock for its IPO at $10 a share. This would value the whole company at $9 billion.

The amount was "at the high end" of what was expected , said the Los Angeles Times. Two weeks ago, Zynga said shares would be priced between $8.50 and $10.

The $9 billion figure for the FarmVille and CityVille creator is still well below what some analysts on Wall Street predicted when the company first filed its IPO plan in July.
At that time, many thought Zynga could be worth $15 billion to $20.

"Then the stock markets went haywire, " said the Times, "gyrating by as much as several hundreds points a day beginning in late August." The debt crisis in Europe followed

Despite all this, Zynga decided to go with the substantially lower valuation. The long-awaited IPO is now set to debut on Nasdaq on Friday.

Max Wolff, chief economist at GreenCrest Capital, predicted to the Times that Zynga's shares would rally in the first few hours of trading, then "hit a wall of skepticism" later in the day.

Michael Cai, a game industry analyst with market research firm Interpret, told the Times , "There's some evidence that Facebook's audience growth is starting to slow down. Then there's the challenge of converting free players into paying customers.

"But if any company can succeed in this space, it's Zynga. There’s no question they are the leader. In the end, it’s a solid company and very well-run."

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