* Company could be valued between $7.7 bln and $9.04 bln
* Could raise $925 million based on price range midpoint
* Zynga toned down valuation amid rocky markets-analyst
By Liana B. Baker and Brenton Cordeiro
Dec 2 (Reuters)- Zynga Inc, which plans to go public in two
weeks, on Friday slashed its value by more than 30 percent to
$9 billion, hoping to avoid the fate of other recent Internet
IPOs that have disappointed after stock market debuts.
The pricing values the maker of Facebook games as high as
$9.04 billion, whereas just two weeks ago a filing listed its
value, based on a third party assessment, at $14.05 billion.
"Given what's transpired in the markets over the several
months and overall macro uncertainly, it seems like Zynga is
trying to take a practical and prudent approach to the deal to
make it seem more appetizing to investors," said Robert W.
Baird & Co analyst Colin Sebastian.
Shares of Internet companies Groupon and Pandora
Media , both high profile IPOs, have slumped below their
IPO prices. Some feared Zynga would find itself in a similar
situation after some previous sky high valuations.
Zynga said in an updated filing on Friday that it plans to
sell 100 million new shares, an 11.1 percent stake, at between
$8.50 and $10 each. A Zynga spokesman declined to comment the
At the midpoint price, the Zynga IPO could raise $925
million, which would make it the largest by a U.S. Internet
company since Google Inc raised $1.7 billion in 2004.
The updated filing with a price range kicks off the
company's road show, in which Chief Executive Mark Pincus and
Chief Financial Officer David Wehner will pitch the IPO to
The road show starts in the mid-Atlantic region on Monday,
with stops in cities including Chicago, Boston, New York,
Denver and San Francisco. Zynga aims to set a final price on
Dec. 15 and the stock is scheduled to trade on Dec 16.
Five-year-old Zynga made its name with viral games such as
"FarmVille," among the most popular on the Facebook social
network. While Zynga's games are free to play, the company
makes money from selling virtual items -- such as tractors and
weapons -- that players then use in games.
Based on a fully diluted share count of 904 million, which
includes existing shares and stock options, the IPO price
values Zynga at $7.7 billion to $9.04 billion.
While Zynga's valuation has been cut from earlier
estimates, Zynga would still be among the largest publicly
traded U.S. game developers after it debuts on Nasdaq under the
Video game developer Activision Blizzard Inc
currently has the industry's highest market value, at $14.2
billion, followed by Electronic Arts Inc , at $7.7
Zynga's debut will follow IPOs this year from Groupon Inc
and LinkedIn Corp that helped revive a market that had
sputtered in recent years. Facebook is gearing up to go public
With more than 260 million monthly active users on
Facebook, Zynga has been adept at herding current players to
its each new free game it releases. Zynga's unique paying
players for the 12 months ended Sept. 30 stood at about 7.7
"We are now entering into the most active launch period in
the history of the company. In fact, we now have more people
working on new games, than existing games," said Chief
Operating Officer John Schappert in an IPO road show video
posted online on Friday.
Pincus, a serial entrepreneur before he founded Zynga, will
hold a class of shares with 70 times more voting power than the
common stock that will be sold in the offering.
Such concentrated voting power in the hands of a CEO is
rare, said Lise Buyer, founder of IPO advisory firm The Class V
Group, who said that investors will have to "think long and
hard" about the unequal voting rights.
A 10-1 voting structure with companies such as LinkedIn is
more common, she said.
"Future shareholders should assume Zynga won't listen to
them," Buyer said.
Deep-pocketed rivals from Walt Disney Co to
Electronic Arts are starting to muscle in on Zynga's turf with
Facebook games of their own.
The company said its IPO represented 14.3 percent of 699
million common shares, excluding restricted stock.