Investors May Value Zynga At Between $7B, $9BBy: Doug Caverly - February 14, 2011
Late last week, reports indicated that several different companies (including Facebook and Google) have shown interest in acquiring Twitter for $8 billion to $10 billion. Now, although nothing’s certain, fresh rumors indicate that investors might assign a similar value to Zynga.
The Wall Street Journal reported this morning, "Social-gaming company Zynga Inc. is holding discussions with potential investors about raising around $250 million in new funding in a deal that could value the three-year-old start-up at between $7 billion and $9 billion, according to people familiar with the matter."
That would be a stunning achievement. For comparison’s sake, we’ll point out that AOL, IAC Interactive, and Yahoo only have market caps of $2.3 billion, $3.2 billion, and $22.0 billion, respectively.
Also, it’s no secret that there are many vocal critics of the design of Zynga’s games, and the company’s dependence on Facebook is another potential weakness.
Depending on your perspective, though, the valuation’s not too much of a leap. Twitter’s still struggling to be profitable, after all, while the WSJ stated, "The huge audience for its games – Zynga has a total of 275 million active monthly users across all its titles – helped Zynga generate about $400 million in profit last year on approximately $850 million in revenue, said another person familiar with its finances."
It should be interesting to see whether anything comes of these rumors.