Zynga Inc. will embark on a road show to promote its initial public offering next Monday, making it the latest dot-com name to try and whet investors’ appetites, two sources familiar with the matter said.
The social gaming leader behind FarmVille follows in the footsteps of recent tech companies to test public markets, including Groupon Inc. and Angie’s List . It could have the biggest Internet debut ahead of Facebook, which a source said is planning to go public in 2012.
Chief executive Mark Pincus will lead presentations to investors, along with chief operating officer John Schappert and chief financial officer David Wehner, two people told Reuters.
Zynga spokeswoman Cynthia Saw declined to comment.
Four-year-old Zynga, which filed for an IPO of up to $1-billion (U.S.) on July 1, is one of the most hotly anticipated IPOs in technology. It rose to prominence on the strength of viral games such as FarmVille and CityVille.
The plan is to price its shares on the Nasdaq before the new year under the symbol “ZNGA,” one of these people said.
Attention will centre on the company’s valuation, estimated at around $14-billion, Sterne Agee analyst Arvind Bhatia said.
That would price Zynga higher than video game heavyweight Activision Blizzard ’s $13.85-billion market capitalization, or Electronic Arts ’ $7.2-billion.
The company will need to outline a clear growth strategy during its road show to justify that rich price tag, Mr. Bhatia said.
Some analysts have remarked on Zynga’s heavy reliance on Facebook as the main platform for its games. Facebook takes a 30-per-cent cut of any revenue earned on it.
Others point to a track record of profitability.
“Relative to some of the recent IPOs, I would think Zynga will do better,” Mr. Bhatia said. “But it will boil down to what the valuation is. The company might be doing well but if the stock price becomes overpriced, that’s the bigger issue.”
In its latest filing with the Securities and Exchange Commission on Nov. 17, the company said a third party performed an analysis that valued Zynga at $14.05-billion. That marked a tripling in less than nine months, Mr. Bhatia estimated.
Zynga – named after Pincus’ late American bulldog – dominates social gaming, but has to contend with a growing pool of deep-pocketed rivals, including Walt Disney Co.
With more than 260 million monthly active users, Facebook has proven adept at herding current players to its free games. Zynga has said its unique paying players for the 12 months ended Sept. 30 stood at approximately 7.7 million.
While its games are free, revenue comes mainly from selling virtual items such as tractors and weapons that people collect in its game worlds.
Zynga will debut at a time of weakness in the dotcom stock universe, with Groupon and Pandora Media Inc. both trading below their IPO prices.