Zynga has finally hit the public markets today, marking the largest technology IPO since Google. Yesterday, the social gaming giant priced its IPO at $10 a share, which was on the higher end of the $8.50 to $10 price range the company indicated a few weeks ago. At $10 per share Zynga would be valued at around $7 billion. Zynga offered 100,000,000 shares of Class A common stock in the offering, raising $1 billion. Zynga, which began trading on the Nasdaq under the symbol ‘ZNGA,’ saw shares pop 10 percent on its opening trade of $11, giving the company a $7.7 billion valuation.
This morning founder and CEO Mark Pincus along with the company management team, board member and Kleiner Perkins partner Bing Gordon, and Pincus’ wife Alison Pincus, rang the opening bell remotely from Zynga headquarters in San Francisco. In early trading, Zynga shares dropped below the offer price of $10 per share.
Of course, the company’s path to IPO hasn’t been smooth. There have been reports of an intense company culture (and subsequent talent drain), a contentious relationship with Facebook around revenue share, virtual goods business, traffic declines and a few ugly lawsuits.
Venture Beat’s Dean Takahashi does an excellent job capturing Zynga’s history here.
As we reported a few weeks ago, Zynga’s Q3 revenue came in at $306.8 million for the quarter, which is up 80 percent from Q3 2010. Net income was $12.5 million, down 50 percent from the third quarter 2010 ($27.2 million). But revenue only grew 10 percent from the second quarter, compared to and 15 percent increase from Q1 to Q2. We’ll see how Zynga’s Q4 financials play out next year. Certainly, investors and Wall Street will be looking for traffic and revenue to increase quarter over quarter.
Zynga’s valutaion at pricing was about half of where early reports were speculating it would be, but Zynga lowered the price in the face of the tepid performance of other tech IPOs lately and general economic concerns weighing down the stock market.
In the offering, CEO Pincus won’t be selling any shares, but investors Kleiner Perkins, IVP, Union Square Ventures, Foundry, DST, Avalon, Google, SilverLake, Tiger Global and others will be selling.
Zynga’s board members include Pincus, COO John Schappert, Gordon, Reid Hoffman, Jeffrey Katzenberg, Stanley J. Meresman, Sunil Paul and Owen Van Natta.
As with all the major technology IPOs that have debuted over the past year, including LinkedIn, Groupon, Pandora and others, shares soar in value in the first few days of trading and eventually level off or even drop. We’ll see how Zynga fares in the coming week.