Zynga Expects Stock IPO To Raise $1 Billion

Social media gaming company Zynga this week is expected to begin trading its shares publicly. It plans to sell 100 million shares — each one priced anywhere from $8.50 to $10. Zynga's initial public offering is expected be the largest technology IPO since Google's in 2004.

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(SOUNDBITE OF THEME SONG TO ONLINE GAME, "FARMVILLE,")

STEVE INSKEEP, HOST:

OK, that song is going to be familiar to millions of people who play "Farmville," the online game of taking care of virtual crops and livestock, and one of several blockbuster games created by the company Zynga. This week, Zynga becomes the latest hot Internet company to launch a public stock offering.

NPR's Aarti Shahani has more.

AARTI SHAHANI, BYLINE: Zynga makes money by selling imaginary goods - goods like tractors that plow farms on Facebook. Its initial public offering is set for this week. Investors are arguing over the company's real value. Zynga hopes to raise about a billion dollars in sales of stock. That would make it the largest technology IPO since Google in 2004.

Stephanie Chang is an analyst with the investment firm Renaissance Capital LLC. She says Zynga is extremely successful at bringing gamers together online.

STEPHANIE CHANG: There are a handful of companies out there that have been able to experience explosive growth and are changing the way, you know, everyday people interact.

SHAHANI: But Sam Hamadeh of PrivCo, he doesn't buy the hype.

SAM HAMADEH: Zynga is no longer the only game in town, if you will.

SHAHANI: All puns intended, social game competitors like Electronic Arts, they're inching in. While social networking is exploding, the numbers of Zynga users are actually down, and the company is claiming a profit this year by borrowing from next year's revenue. Hamadeh thinks that Zynga is pricing its stock low on purpose. That way, headlines will say...

HAMADEH: Zynga's stock jumped 20, 30, 40, 50 percent. And it makes for a great marketing story.

SHAHANI: Going public is, by no means, the end of the story. Zynga has to work through the next year to convince gamers, and now traders, to stay invested. Aarti Shahani, NPR News.

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Correction Dec. 14, 2011

A previous online introduction to this story incorrectly said that the Zynga IPO was expected to be the largest since Google's in 2004. It was actually expected to be the largest technology IPO since Google's.

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