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Zynga on schedule to price its IPO Thursday

December 15, 2011 | 12:55 pm

For Zynga Inc. and its chief executive Mark Pincus, Christmas Eve could arrive Thursday night, when its shares are expected to be priced for an initial public offering on Nasdaq and begin trading Friday.

The company two weeks ago said it expected its stock would fetch between $8.50 and $10 a share, giving the San Francisco social game developer a total valuation upwards of $9 billion, including the options and grants that have been doled out to senior management.

Since then, executives have crisscrossed the country attempting to drum up investor enthusiasm for its IPO. On Thursday night, the company will see whether they've been deemed naughty or nice as Zynga's shares are slated for official pricing as mutual funds and other institutional investors place their buy orders.

Already, analysts are divided over whether Zynga is a good bet. BTIG's Richard Greenfield on Wednesday gushed that Zynga's debut would be "the biggest IPO since Google," and recommended investors jump on the stock because the company's games -- including FarmVille, Words With Friends and Mafia Wars -- are a "cure for boredom" whose popularity would "outpace TV." 

Other analysts are more reserved. Arvind Bhatia of Sterne Agee cautioned against getting caught up in the social gaming craze.

"Zynga's growth is slowing even faster than what is obvious at first, its margins are under pressure and free cash flow has been declining recently," Bhatia wrote in a note released on Tuesday. "Thus we believe the implied valuation in the IPO is not justified."

Bhatia said a fairer price for Zynga's shares would be closer to $7 a share, versus rate Zynga had projected.

That leaves the market to decide on Friday whether Zynga's stock is worth a diamond, or a piece of coal.


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-- Alex Pham

Twitter/ @AlexPham

Photo: Zynga Chief Executive Mark Pincus. Credit: Associated Press