Zynga will tomorrow add itself to the list of dotcom 2.0 companies filing for IPOs, joining the ranks of other 21st century Internet companies including Groupon, Pandora, LinkedIn, and expected soon, Facebook. The Zynga IPO is estimated to value the company at $15 to $20 billion and raise between $1.5 and $2 billion in cash for the social media gaming company behind Farmville, Mafia Wars, and Zynga Poker. Zynga's S-1 filing will the SEC will indicate the company is desiring to raise cash for debt and equity funding. But perhaps most important to investors, according to the S-1 filing, Zynga will report that it is already profitable, which puts it far ahead of other dotcom 2.0 companies like Pandora and Groupon that are bleeding money and expected to do so for multiple fiscal quarters to come.
Zynga hopes to follow in the footsteps of buzzworthy IPOs launched this year, such as Pandora and LinkedIn. Both of those companies launched their stocks to a media and investor frenzy, with share prices jumping up more than 50% in the early hours of trading, only to see share prices crash down to below IPO levels only weeks later (or in Pandora's case, the very next day). A resurgent market of late, however, has seen share prices of both LinkedIn and Pandora now back up above initial IPO levels, closing today at $90.09 and $18.91, respectively.
Analysts are stating that Zynga would like its IPO to launch sometime in the early fall. Of note, Zynga is reportedly considering only making 10 percent of shares available to the general public, thus attempting to increase their value.
Unlike Groupon and Pandora, which are shaky investments at best, Zynga seems like a solid investment bet if you are willing to hold for the medium term since the company is already making a profit.