Does a Solid Nexon IPO in Japan Bode Well for Zynga? (ZNGA)
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Zynga’s (Nasdaq: ZNGA) plan to raise $1 billion in its initial public offering later this week may be a lot more reasonable than many first suggested.
On the Tokyo Stock Exchange Tuesday, Nexon, an Asian-based competitor of Zynga, was able to raise $1.2 billion in its initial public offering. An AllThingsD article Wednesday morning highlights the similarities/differences of the two.
Each company develops online games for mobile devices on both Apple’s (Nasdaq: AAPL) iOS and Google’s (Nasdaq: GOOG) Android operating system. Nexon has been around for seven years while Zynga is only going on its fourth year as a company. Management at Zynga is looking for the same valuation Nexon received and would need to sell one billion shares at the top end of its pricing range, $8.50-$10.00, to reach that goal.
Not everyone is feeling the love for the online gaming site. An analyst at Sterne Agee has already weighed in on the matter, starting coverage on the stock with an Underperform rating and $7 price target. The analyst noted the company’s decline in free cash flow, the pressures currently on margins, and the faster than expected deceleration in growth. Although Zynga’s bookings rose 156 percent last year, the firm is forecasting growth to fall to 20 percent in 2012 and to 17 percent in 2013.
Despite the reassuring signal from Japan, given the social media IPO market over the last year, it’s surprising any company still wants to go public...
On the Tokyo Stock Exchange Tuesday, Nexon, an Asian-based competitor of Zynga, was able to raise $1.2 billion in its initial public offering. An AllThingsD article Wednesday morning highlights the similarities/differences of the two.
Each company develops online games for mobile devices on both Apple’s (Nasdaq: AAPL) iOS and Google’s (Nasdaq: GOOG) Android operating system. Nexon has been around for seven years while Zynga is only going on its fourth year as a company. Management at Zynga is looking for the same valuation Nexon received and would need to sell one billion shares at the top end of its pricing range, $8.50-$10.00, to reach that goal.
Not everyone is feeling the love for the online gaming site. An analyst at Sterne Agee has already weighed in on the matter, starting coverage on the stock with an Underperform rating and $7 price target. The analyst noted the company’s decline in free cash flow, the pressures currently on margins, and the faster than expected deceleration in growth. Although Zynga’s bookings rose 156 percent last year, the firm is forecasting growth to fall to 20 percent in 2012 and to 17 percent in 2013.
Despite the reassuring signal from Japan, given the social media IPO market over the last year, it’s surprising any company still wants to go public...
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