NEW YORK (AP) — Investors will get the chance to reap “Farmville’s” harvest on Friday, as shares of online game developer Zynga Inc. start trading on the Nasdaq Stock Market.
The San Francisco company, which specializes in Facebook games, priced its initial public offering late Thursday at $10 per share, raising $1 billion. That makes it the largest Internet-related IPO since Google Inc. went public in 2004, raising $1.4 billion.
The price was at the top of its expected range, a sign that investors are eager to dig into the latest in a series of high-profile technology IPOs this year. It values the company at about $7 billion.
Zynga charges small amounts of money — a few cents, sometimes a couple of dollars — for virtual items in online games. The games are free to play. Players can aquire items that range from crops in “Farmville” to buildings in “CityVille,” its most popular Facebook game.
With its huge player base and a few loyal spenders, Zynga earned a net income of $90.6 million in 2010, an unusual pre-IPO money maker in the sector.
Cowen & Co. analyst Doug Creutz, however, initiated coverage Friday with a “Neutral” rating on the stock. While Zynga is the leader in Facebook gaming, he’s concerned that it won’t be able to grow fast enough to justify its stock price. Growth in Facebook gaming has slowed, and Zynga’s market share has declined from 50 percent to 38 percent of daily active users, he wrote.
He’s also concerned that Zynga’s famously aggressive and hard-charging culture may not be the best field to grow good games in. Others have raised concerns that the focus on deadlines and profits might be squeezing out creativity and talent.
In November, online coupon company Groupon Inc. raised $700 million in its IPO. The granddaddy of all Internet IPOs might happen next year, as Facebook Inc. is expected to raise as much as $10 billion.
Zyna will trade under the ticker “ZNGA” on Friday.