Zynga’s IPO may face delay

Steve Dinneen
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ZYNGA may delay its pending IPO until November, with current market turmoil threatening to derail its plans to achieve a valuation as high as $20bn.

The float, in which the online games firm plans to raise $1bn, was slated for September but Zynga feels it could inspire more investor confidence if it waits another month.

The delay will also give the FarmVille maker time to iron out issues with the SEC, which has flagged up some “non-traditional accounting measures” in its S-1 filing.

Zynga said in its filing that it uses a financial measure called bookings, which is revenue from the sale of virtual goods that are used in games – such as weapons or crops – and from advertising over a certain period of time.

The company uses the bookings figure internally but said it is not meant to “substitute for revenue recognised in accordance with generally accepted accounting principles”.

Experts say the delay makes sense for Zynga, which has a stash of available cash and is in no hurry to raise the capital. Technology stocks have been hit particularly hard by recent market jitters.

The firm is understood to be considering an unusual three-tiered structure for its stock that will give shares held by its chief executive Mark Pincus 70 times the voting power of ordinary shares.

Zynga hopes recent investor demand for dotcom stocks will help push it to an eye-watering valuation of $15-20bn.

Business networking site LinkedIn was valued at $4.25bn after its IPO in May and a string of other top internet firms are planning bumper floats over the coming months.

Groupon is expected to have a market cap of $20bn when it makes its stock market debut and fellow discount business LivingSocial is also hoping for a multi-billion valuation.

But the most hotly-awaited IPO is that of Facebook, which has long-planned to float in the first quarter of next year.

Valuations of the firm have consistently risen, with the latest figure pushing a staggering $100bn.