Social-gaming company Zynga is ready to brave the turbulent initial public offering market, and if the IPO goes well, it might just raise over $1 billion.
Zynga reported in a Securities and Exchange Commission filing today that it will price its stock between $8.50 and $10 a share. The company currently plans to sell 100 million shares, but has made 15 million additional shares available for over-allotment. Depending on how well Zynga can attract buyers, the company could raise between $850 million and $1.15 billion in its offering.
"We intend to use the net proceeds to us from this offering for general corporate purposes, including working capital, game development, marketing activities and capital expenditures," Zynga said in the SEC filing. "We intend to use approximately $83.6 million of the net proceeds to satisfy tax withholding obligations related to the vesting of restricted stock units, or ZSUs, in connection with this offering. In addition, we may use a portion of the proceeds from this offering for acquisitions of or investments in complementary businesses, technologies or other assets."
Although Zynga didn't say how much it will earmark for charity, the company said that it also wants to use "a portion of the net proceeds to charitable causes through Zynga.org, our philanthropic initiative."
After Zynga goes public, it will catapult to the top of the gaming landscape. Assuming the company can go off at $10 per share, it will have a valuation of about $7 billion--slightly below game publisher Electronic Arts' $7.73 billion market capitalization. The FarmVille developer, however, will still be dwarfed by Activision Blizzard's $14 billion market cap.
. The company was expected to go public as early as September, but the unpredictable IPO market made the move too risky. Last month, Bloomberg reported that Zynga had decided to , but the publication's sources didn't say exactly when it would go public.
Although it provided its price information today, Zynga balked at saying when its shares will be offered. That said, in many cases, companies provide pricing information near to their IPOs.
From a financial perspective, Zynga will prove to be one of the more affordable IPOs this year., and Russian search engine . Groupon when it held its IPO last month. At $10 a share, Zynga would be offered at the same price cloud-storage company .
That relative bargain might have much to do with investor uncertainty on Wall Street, but it also reflects some of the concerns would-be Zynga shareholders have with the company.
For one, Zynga came under fire earlier this year after the SEC ordered the company to stop using "non-traditional accounting measures" that the organization said, could provide an inaccurate view of the company's financial performance. Zynga has also been criticized for relying too heavily upon Facebook to drive its business. In today's filing, the company said that Facebook accounted for 81 percent of its accounts receivable at the end of September.
That said, Zynga has been performing well financially. In the nine months ended September 30, the company generated $829 million in revenue and a profit of $30.7 million.
But exactly what the company will look like after it goes public and employees can cash in remains to be seen. Over the last several weeks, current and former employees have been complaining about Zynga, saying that it fosters an undesirable work environment. Last month, at least one employee said that they plan to leave Zynga andas soon as the mandatory 180-day lock-out period following the IPO is up, and there is rampant speculation that many others will be close behind.
Zynga hasn't been able to strike back against those reports because of a mandatory quiet period instituted by the SEC.
When Zynga goes public the company will trade on the Nasdaq under the ticker ZNGA.
This story was updated several times throughout the morning.