Zynga IPO Delayed as Market Conditions, Regulators Weigh
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Zynga, the maker of addictive online multiplayer games like FarmVille and Mafia Wars, is curbing its rush for an Initial Public Offering (IPO).
According to the NY Post Monday morning, Zynga may delay its IPO due to recent market turmoil. Expected to be around $1 billion, the offering may now come in November, a few months off its original plans to go public in September.
The Post notes that, since S&P's downgrade of U.S. debt earlier in the month, about a dozen IPOs have been delayed. One source said Zynga is waiting until after Labor Day for more market clarity.
But beyond market conditions, Zynga is waiting for the U.S. SEC to clear its S-1 filing. The company has already resolved several issues raised by the regulatory body, but some issues may still remain. Companies like Zynga and Groupon have been criticized for using non-traditional accounting measures.
The SEC told Zynga to stop touting a metric it refers to as "bookings" ahead of strict quarterly revenues. Further, the SEC wanted more color on a statement in the S-1 saying Zynga relied on a small percentage of paying customers for nearly all of its revenue. Zynga responded, saying that less than 5 percent of its hundreds of millions of users actually pay for virtual goods created to enhance game play.
But the SEC wants a better response with more specific detail about each of its games in terms of the percentage of revenue each contributes, and who is paying to play.
Until those details get worked out, a Zynga IPO may be on pause for a while.
According to the NY Post Monday morning, Zynga may delay its IPO due to recent market turmoil. Expected to be around $1 billion, the offering may now come in November, a few months off its original plans to go public in September.
The Post notes that, since S&P's downgrade of U.S. debt earlier in the month, about a dozen IPOs have been delayed. One source said Zynga is waiting until after Labor Day for more market clarity.
But beyond market conditions, Zynga is waiting for the U.S. SEC to clear its S-1 filing. The company has already resolved several issues raised by the regulatory body, but some issues may still remain. Companies like Zynga and Groupon have been criticized for using non-traditional accounting measures.
The SEC told Zynga to stop touting a metric it refers to as "bookings" ahead of strict quarterly revenues. Further, the SEC wanted more color on a statement in the S-1 saying Zynga relied on a small percentage of paying customers for nearly all of its revenue. Zynga responded, saying that less than 5 percent of its hundreds of millions of users actually pay for virtual goods created to enhance game play.
But the SEC wants a better response with more specific detail about each of its games in terms of the percentage of revenue each contributes, and who is paying to play.
Until those details get worked out, a Zynga IPO may be on pause for a while.
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