Back in April 2010, Zynga issued stocks in the market which valued the company at $4 billion. After ten months, the valuation got more than doubled. According to a report by Wall Street Journal, the social gaming giant is talking to potential suitors to raise $250 million from new round of funding, which would value the company at around $10 billion. The investors with whom Zynga is having talks are T. Rowe Price Groups and Fidelity Investments.
The deal is in the nascent stage and nothing has been finalised so far. The prominence of Zynga as a social game developer has been soaring. Some of their games like Ghost Racer, Heroes vs. Villains, Prison Lockdown had been discontinued. But the ones, which had become popular, literally touched the sky. FarmVille, Mafia Wars, FishVille earned bundles of money until CityVille came and topped them all gathering 100 million monthly active users in a short span of time.
From then onwards, Zynga is the in list of favourites of the venture capitalists. Since Zynga uses Facebook as the platform for publishing the games, sooner or later investors had to think of investing into the company as success through Facebook is inevitable.
There’s another fuel that is the driving force of the talk. Currently there are lots of investors receptive enough to spend money to buy shares of social media companies. Even if we set Facebook aside, LinkedIn, Twitter and Groupon all have raised funds by venture capital. Zynga may appear as a new addition in this list.
There’s however one slight nudge. The venture capital firms are investing into internet companies, sometimes by purchasing the shares, spending more than what those shares actually cost. They are doing it with the hope that when those companies will go for IPO, their investments will fetch tons of money. But Zynga may not go for IPO soon and even sources said that only when there will be slowdown in the growth, they will go for public offering. That’s why even if Fidelity Investment and T. Rowe Price Groups invest into Zynga, they will keep on pushing the company to sell their shares in public market.
But all these are speculations. As I said, nothing has established yet.