IPO predictions
In related news, while there are rumours that Facebook could go public in 2012, The New York Times has reported that one of the network's biggest partners, social games company Zynga, is unlikely to opt for its own IPO.
The 3 year old social gaming giant behind hits like Farmville and Mafia Wars will reportedly focus on growing its business beyond Facebook instead of going public, an anonymous source told the newspaper.
There is currently controversy surrounding some wealthy investors being able to invest in fast-growth internet firms like Facebook, Zynga and LinkedIn for example, through private secondary markets, pushing up company valuations. Zynga reportedly trades on SharesPost at an estimated valuation of a staggering $5.8bn, while Facebook has recently been ‘valued' at almost $54bn.
One analyst at Wedbush Securities called Lou Kerner told The NYT she estimates that Zynga made over $500m in revenue just last year, with possible profit margins of 20 percent.
She reckons that a ‘wave' of companies will go public if Facebook takes the plunge. However, Zynga's founder, Mark Pincus has reportedly previously said that he wants to keep control of the company and it's apparently not short of cash having reportedly raised over $360m.
It is estimated that Zynga has almost 298 million monthly active users across its gaming portfolio which reportedly includes 4 of the 5 most popular social games tracked by AppData. Unsurprisingly most of its revenue is believed to come from the sales of virtual goods and it has working advertising partnerships with the likes of MacDonald's and Sony Pictures.
Various investment bankers reportedly believe that Zynga gets 70 percent of its business via Facebook, making it heavily dependent on the social network but the firm has recently branched out to other platforms like the iPhone and iPad plus Yahoo.
