Zynga Inc (Nasdaq: ZNGA) Raises $1 Billion in IPO

Tallahassee, FL 12/16/11 (StreetBeat) --Zynga Inc. (Nasdaq: ZNGA) raised $1 billion in its initial public offering, pricing shares at the top of its marketed range.

The developer of such popular games as CityVille, FarmVille, and Mafia Wars sold 100 million shares for $10 each. Zynga had offered the stock for $8.50 to $10 a share. It will start trading today on the Nasdaq under the symbol ZNGA.

Zynga’s is the biggest offering by an American Internet company since Google (Nasdaq: GOOG) raised $1.9 billion in its 2004 IPO. It planned to offer about 14 percent of its common stock, according to a regulatory filing. Other Internet companies making their public debuts this year — Groupon , LinkedIn , and Pandora — offered less than 10 percent, using smaller free floats to boost initial demand for their stock, pushing the price higher.

Founded in 2007 by CEO Mark Pincus, Zynga doubled sales to $829 million in the first nine months of 2011. The IPO values Zynga at as much as $7 billion, or 6.8 times revenue in the year through September 30. Rival Electronic Arts (Nasdaq: ERTS) has a market value of $6.9 billion, or about 1.8 times sales.

The game maker’s increasing ubiquity and expansion prospects appeals to investors, said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco.

“Zynga and its games are becoming consumer brands and there is a lot of recognition for growth potential,” he said. “My guess is that the shares will be well-received.”

Zynga planned to sell all of the shares in the IPO, and to use the net proceeds, or about $889 million, for game development, marketing, and general corporate purposes.

Zynga gets more than 90 percent of its revenue from Facebook , which is currently preparing for its own IPO, which could value the company at more than $100 billion, a person with knowledge of the matter said last month.

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