Online games developer Zynga is planning to sell an 11 percent stake in its initial public offering (IPO), that would value the company at over $9 billion on a diluted basis.
The games developer plans to sell 100 million shares at a price between $8.50 and $10 each, seeking as much as $1 billion in revenue.
Two weeks ago, a filing by the company stated that a third-party analysis had valued it at $14.05 billion. Whilst the current estimation is lower than this analysis, it still makes Zynga amongst the largest publicly traded U.S based game developers.
The current highest market value is that of Activision's Blizzard, currently valued at $14.2 billion.
The proportion of shares within the IPO is larger than many other recent internet-based IPOs this year. Zynga plans to sell 14.3 percent of its outstanding shares, in comparison to Groupon's 5.5 percent at their debut.
Widely recognised for popular games such as FarmVille and Mafia Wars, five-year-old Zynga’s games are free to play, but the developer generates revenue by the sale of virtual items for players to use and through advertising.
Zynga’s games are available on various social networks and mobile platforms, but a substantial percent of its revenue derives from Facebook users accessing its games.
According to Appdata, Zynga’s popularity currently ranks at the top with 215.7 million current monthly active users.
The game developer's reliance on revenue through Facebook may in the future affect the company’s value. With continual changes to the social media platform, Facebook now requires applications to use its own Credits payment method. As a consequence, Facebook now receives a larger share of profit through Zynga’s players than when previous payment options were available.
Zynga's debut will follow IPOs this year such as Groupon. and LinkedIn, with Facebook planning to go public next year.