Zynga gets ready for IPO
The Zynga logo is displayed on the front of the company's former headquarters on December 9, 2011 in San Francisco, Calif
Kai Ryssdal: Word is that Zynga, the online gaming phenomenon, is gonna go public this week. When it comes to IPOs, you never know almost 'til you know.
But Wall Street seems to think the stock offering could raise more than $1 billion. For those -- like yours truly -- for whom social gaming doesn't really do it, Zynga's is the company behind "FarmVille" and a whole slew of other popular online games. It's also one that's figured out how to make money by selling virtual stuff -- which is just kind of amazing.
Marketplace's Steve Henn reports.
Steve Henn: Zygna's best known for creating social games on Facebook -- like "FarmVille" and "Mafia Wars," which have attracted more 200 million users. Now Zynga's branching into mobile games. The thing about Zynga is its games can be addictive.
Michael Pachter: That's why Alec Bawldwin got himself booted off a plane last week. He didn't want to stop playing "Words With Friends" on his cell phone.
Michael Pachter is a video game analyst at Wedbush Securities. He says Baldwin may not be the ideal airline passenger, but...
Pachter: It's still a great advertisement for Zynga because I think that a lot of investors don't think that they know anybody who has ever played a Zynga game. And that's just not true. It's people like Alec Bawldwin and me.
Zynga's games are free. It makes money by selling virtual goods. Like make-believe cows on "FarmVille" or bloody chainsaws on "Mafia Wars." But only a tiny fraction of hardcore addicts ever spend a dime. This year Zynga's set earn more than $40 million in profits. But Wall Street thinks the company has serious potential. When the company goes public, it is likely to be valued at $7 billion to $9 billion.
Bill Blau: That's a lot.
Bill Blau an analyst at Garnter.
Blau: I don't know of other ways to calucualte it, to say it's not a lot -- but it is. There is clearly some hype that's built into this.
And lots of pressure, too. To live up to that stock price, Zynga's going to need a steady string of new hits. And lots of Alec Baldwins.
In Silicon Valley, I'm Steve Henn for Marketplace.