Zynga: This Year's Zinger IPO, With Revenue, Profit and Hype
Zynga is getting set to drop its official IPO paperwork Wednesday -- at least, if you believe independently-reported rumors from the Wall Street Journal, Bloomberg, and All Things Digital. As if the company needed to gin up any more investor fervor than it already has.
Unlike some of the companies that have recently gone public or filed their intention to do so -- Demand Media (DMD), LinkedIn (LNKD), Pandora (P), and Groupon -- Zynga is in a class by itself. If you believe the reports and estimates, Zynga made $400 million in profit on $850 in revenue last year. This year, it's supposed to generate $1.5 billion in revenue this year and $500 million of net income.
All of this may be true or not, of course. LinkedIn used to claim years of profitability until the public filings showed otherwise. Groupon's losses have been so large that it could only pretend to be doing well by redefining profit to exclude its gargantuan marketing budget.
And if Zynga is the real deal...
As I now habitually say about private businesses that claim profitability: The company claims to be profitable but would not submit financials to prove that management is not a lying sack of opportunistic dog turds.
But say just for a moment that Zynga is the real deal. If so, the hoopla around this IPO is going to make previous excitement this year look like characters in an Edward Hopper painting. Real and sustained profits will only be the beginning.
To get its $15 billion to $20 billion valuation, the company is expected to sell between $1 billion and $2 billion in stock. And given that Zynga also plans a low-float IPO, like LinkedIn and Pandora, the share price will start high and wind up far higher. It will be one of those few cases these days where institutional investors can put plenty of money down and not worry about the deal being too small for them. This is going to make the LinkedIn hoopla look like nothing.
Related:
- Venture Capital Industry Has Too Much Money for IPOs
- Pandora's Morning After, and the Associated Management Headache
- Zynga to Stoke the Tech Bubble with a Low-Float IPO
- Groupon Vs. LinkedIn: The IPO Bad Boy Smackdown
- Groupon Loses So Much Money, It Needs Its Own Daily Deals
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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