Zynga stock priced at $10 a share
Zynga Inc. priced its stock at $10 a share late Thursday, allowing the San Francisco creator of FarmVille to harvests as much as $1.15 billion from selling up to 115 million shares, about 12.9% of the company.
At $10 a share, Zynga clocks $9 billion valuation, including stock options and grants allotted to executives.
The amount was at the high end of what the company had projected two weeks ago, when it said shares would be priced between $8.50 and $10, implying that the company was worth as much as $9 billion. That was well below what some analysts on Wall Street predicted when the company first filed its initial-public-offering plans in July with the U.S. Securities and Exchange Commission.
At that time, many had predicted Zynga could be worth $15 billion to $20 billion. But then the stock markets went haywire, gyrating by as much as several hundreds points a day beginning in late August. Debt crisis in Europe further squeezed the credit markets, leaving many IPOs, including Zynga's, in limbo.
Despite continued market volatility, the company pulled the trigger Dec. 2 with a substantially lower valuation than expected, setting into motion its long-awaited IPO, which is now set to debut on Nasdaq on Friday.
Max Wolff, chief economist at GreenCrest Capital, predicted that Zynga's shares would rally in the first few hours of trading, then "hit a wall of skepticism" later in the day.
"We've heard a lot of bearish chatter on Zynga," Wolff said.
Some investor concerns pertain to the $1-billion market for social games and its ability to continue its exponential growth, said Michael Cai, a game industry analyst with Interpret, a market research firm in Los Angeles.
"The industry in general faces a number of challenges," Cai said. "Some of that has to do with Facebook, where most social games currently are played. 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."
-- Alex Pham
Image: A screen shot of CityVille, Zynga’s most popular game.