ZYNGA, the online games developer, could pitch its shares at a float price valuing the company as low as US$10 billion, half some estimates from earlier this year, it has emerged.
The company plans to sell about 10 per cent of its shares in an initial public offering on 15 December, raising approximately $900 million at the mid-point of the proposed $8-$10 per share range.
Bankers have scaled back their ambitions for the valuation after a rocky month for technology stocks and for recent flotations in particular. Groupon, the daily deals company which joined the stock market on 4 November, has slumped below its offer price, as has online radio group Pandora Media. LinkedIn, the social network, has also fallen sharply in value.
In the prospectus, Zynga said it had obtained an independent valuation that suggested it could be worth $14 billion, and estimates earlier this year ranged from $15 billion to $20 billion. The company makes the wildly popular Facebook games FarmVille and CityVille, as well as a host of other simple games that can be played on the internet. It had revenues of $306.8 million in the three months to September, up from $279.9 million in the three months before, and it turned a profit of $12.5 million. It makes money from selling so-called "virtual goods", such as imaginary livestock and machinery to populate its farms in FarmVille.
Zynga was founded in July 2007 by Mark Pincus, a Chicago-born business school graduate who started his career in investment banking. Now 45, he is the company's chief executive and is leading the roadshow for potential investors which begins next week.
The company will be emphasising its soaraway growth and the speed with which it can develop new games, but some analysts have questioned a valuation that sets it among the largest games developers in the world. Electronic Arts has a market value of $7.7 billion, while Activision Blizzard, owner of World of Warcraft, is worth $14.2 billion.