Social media game maker Zynga Inc. (NASDAQ: ZNGA) priced its IPO at $10/share, and the first 100 million shares are now in investors’ hands. The IPO raised a cool $1 billion, in the largest US internet stock offering since Google Inc. (NASDAQ: GOOG) raised $1.9 billion in its IPO.
The stock offering included about 14% of Zynga’s common stock, putting a total value on the company of something more than $7 billion. In August, the company had figured on a valuation double that amount. Zynga expects to net about $890 million from the stock sale, and has said it will use the funds for game development, marketing, and general purposes.
Zynga’s IPO follows that of Japanese game maker, Nexon Co., which completed an IPO in Tokyo last week and raised $1.2 billion.
About 90% of Zynga’s revenue comes from Facebook, where the “Cityville,” “Farmville,” and “Mafia Wars” games are hugely popular. That’s Zynga’s blessing, of course, and its curse. Any change in the relationship with Facebook, which is expected to have its own IPO sometime next year, could be a serious if not mortal blow to the game company.
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