Zynga Inc., an immensely popular online games developer specializing in Facebook apps such as FarmVille, Mafia Wars, CityVille and ZyngaPoker, is apparently planning to announce a $1 billion IPO (initial public offering) in the coming days. This will allow the public at large to purchase stock in a company that may hold the key to the future of online poker.
Bloomberg reports that Morgan Stanley will serve as the chief underwriter of the new IPO, with Bank of America and Goldman Sachs rumored to be involved as well. Zynga spokespeople, however, have yet to make an official announcement.
This past March in Las Vegas, Zynga hosted a massive poker convention entitled PokerCon. The move incited both investors and online poker players to take the San Francisco-based company more seriously.
Just why is Zynga so important to the online poker community? Volume and profitability. Currently, ZyngaPoker has built up an enormous player base despite only offering play-money poker (the only form of online poker currently legal in the U.S., anyhow). If the U.S. finally decides to legalize, regulate and tax online poker, ZyngaPoker could simply acquire the proper licensing and rely on their already massive membership to convert to real money accounts. The fact that former giant Full Tilt Poker has been shut down globally due to some not-so-ethical business practices adds fuel to the speculatory fire.
Economic experts say that Zynga’s profit margin is absurd, even among a pool of bustling tech IPOs that rivals the 2000 dot-com bubble. Their profitability is a direct result of their unique business model: Zynga offers its games for Facebook, iPhone and other devices free of charge. However, the games offer virtual upgrades for a real money fee, and sales of these items are expected to exceed $1.5 billion this year alone. If estimates prove correct, Zynga could have a total value of up to $20 billion shortly after going public.
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