14 DAY TRIAL // Following two very successful web IPOs in the past couple of weeks, it looks like the time is right for hot internet companies to be going public. Investors are clearly hungry for this type of companies and the high valuations they fetch could mean a lot of money for the companies, their founders and existing venture capital investors.
The latest to be going public is Zynga, according to a report last week. It's hardly surprising, the company was said to be thinking about an IPO for quite some while now.
All Things D reported that the company will be filing for an IPO very soon, it should be revealed in the next few days. Following great performance from both LinkedIn and the Russian search engine Yandex, Zynga's move should be a smart and obvious one.
But there are still those questioning the value of these companies and saying that the hype is not justified. There is talk of another bubble, though the general consensus is that it's clearly not the case.
The main argument against it is that the companies going public are real businesses, making money. In the case of both LinkedIn and Yandex, they ended up being worth significantly more than their 2010 revenues, but considering the pace they're growing at, this may be justified.
And Zynga is making a lot more money than either LinkedIn or Yandex already, its revenue was estimated to have been at about $850 million for 2010 with a profit of about $400 million.
And it should be holding on to that revenue, as its traffic on Facebook, where it gets the bulk of its users and money, has been very stable even as all other app makers were seeing fluctuations and losses.
In fact, it is said that the financial numbers Zynga will disclose when filing for the IPO are significantly better than that. At its last round of funding, Zynga was worth $10 billion, but it will likely be going public for a lot more than that.
LinkedIn was the biggest internet IPO since Google, then Yandex stole its crown less than a week later. Zynga is expected to be going for a lot more than either of the two companies. Of course, these are all still very small players considering that Facebook shares are trading on the secondary markets at prices valuating the company at over $80 billion and Facebook is still a year away from its IPO.