Zynga Seeks $1 Billion In IPO 93
bizwriter writes "Zynga finally filed its IPO paperwork today, as it wants to raise $1 billion. And while the reports of how well it did were significantly overstated, this is a company that still makes significant revenue and profit. If you thought that LinkedIn's IPO was hyped and hyper, Zynga's going to put that all to shame."
Though High, Not Even Close to LinkedIn Hype (Score:5, Interesting)
If you thought that LinkedIn's IPO was hyped and hyper, Zynga's going to put that all to shame.
Okay so let's take a look at the two IPOs. From Slashdot's own summary of LinkedIn's IPO we have this fact about what the shares were trading at on LinkedIn's opening day:
That price values the company at over 30 times its 2010 revenue ...
So now that we can see Zynga's financials, we see that its revenues for 2010 were $600 million [seekingalpha.com] meaning that if the shares hold at exactly the price Zynga opens at, they will be valuing Zynga at 1 2/3 times their 2010 revenues. Now, of course, last year's revenue doesn't mean everything as growth, market cap, etc come into play. But that 1 2/3 times is substantially less than the ridiculous 39x amount that LinkedIn's IPO skyrocketed to. If the total trading volume's valuation goes from $1 billion to $23.4 billion in the first day of trading then we'd be approaching LinkedIn-levels of bubble hype. How exactly is Zynga going to "put that all to shame"? Are you in possession of some proof that the trading will once again go ape shit past $23.4 billion? I think the recent MySpace sale has shown that a company that makes games (though shaky) is nowhere near as volatiles as a company that relies upon its social network to fill its coffers.
Remember, some folks estimate that Farmville alone is now worth more than EA [slashdot.org].
I hate Zynga with a passion and am convinced that Words with Friends has completely destroyed my Android phone's battery life (all the while showing me ads to improve my battery life) but I think they're a far better bet than LinkedIn. I've commented on Zynga's 7 Eleven partnership long ago [slashdot.org] and I think that market penetration is massive and gives them an upper hand that I cannot fathom how the competition will beat -- especially if that's an exclusive contract.
All aboard! (Score:4, Interesting)
All aboard! The gravy train is leaving this station.
This is another bubble, which is being inflated now, and since people have short memories and no understanding of economics they are jumping right on it.
These new software service/product companies are going IPO now, while things are still moving. Wall Street wants to push these companies right now, one after the other, feeding the frenzy, as they know it won't last.
These insane valuations that Linked In and all these other new IPOs are going at are forward looking, they are assuming 100% profitability at current level. They have no space to go but DOWN.
Don't believe the hype.