Zynga preparing to file IPO

Zynga Inc, the biggest maker of games on Facebook, is preparing to file for its Initial Public Offer (IPO) by the end of June. Zynga wants to make use of the current hype surrounding shares of social media companies. Executives have already met officials at Morgan Stanley and Goldman Sachs and are finalising regulatory filings. Social media firms are lining up for IPOs after shares of Linkedin more than doubled in its public debut a week ago. Shares of Yandex, Russia’s most popular search provider, surged by as much as 55% recently.

At a $ 8.2 billion valuation on Sharespost Inc., Zynga already tops EA (Electronic Arts), which is valued at $ 7.7 billion on the Nasdaq Stock Market. Zynga has 248 million monthly active users on Facebook and owns three of the four most popular apps on the site - “CityVille,” “FarmVille” and “Texas HoldEm Poker.” Zynga’s top game, CityVille, boasts 90 million monthly active users, while the company’s other hit FarmVille has around 45 million monthly users. Its original poker game still manages to attract around 35 million users every month. These games are free to play, but the company makes money by selling virtual goods within the apps and letting users pay to reach higher levels. The company makes handsome amounts of money every year –$400 million in profits out of total revenues of $850 million.  The company has also puffed up its manpower forces, employing more than 800 people last year,  thus increasing its full time employee count to 1500 in offices spanning over 13 countries.

The social media scene is simmering with activity with Linkedin filing for an IPO and others such as Facebook, Groupon and Twitter expected to go public in the coming months. Financial analysts are divided over whether social media stocks are being overvalued, just as internet companies were during the dot com boom in the late 1990s. 


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