Zynga Selling More Shares
Social games developer Zynga (ZNGA) plans to sell $400 million in stocks in a secondary offering less than six months into its IPO. The company’s plan is to distribute the stocks more evenly among the current shareholders and to avoid stock dumping once the “lockout” period ends on May 28.
Zynga will not make any profit from the secondary offering, as the proceeds will go to the investors. The stock declined in value a couple of months after the initial offer ($10) last December, but picked up in February. The stock peaked at $15.90 this month, but closed at $13.06 last week.
Zynga’s announcement comes more than two months ahead of the expiration of the “lock-up” agreement for IPOs, which prevents pre-IPO investors from selling shares six months after a company goes public.
Zynga recently unveiled its new gaming and development platform, Zynga.com. It partnered with popular game developers such as Konami, Playdemic, Rebellion, MobScience, Sava Transmedia and Row Sham Bow to expand its lineup of games and to penetrate newer markets. Zynga is slowly weaning itself from its social networking partner Facebook, which is also planning to go public this year. Facebook’s IPO however is undergoing a rough patch because Yahoo is suing it for patent infringement.
The secondary offering will only be available to existing shareholders of the stock, and they will be bound by a new agreement locking up their shares for a new period, ending in July or August. While some analysts see this as a weakness in the stock, most pundits write this is a normal procedure meant to stagger the resale of shares and shore up the stock’s strength down the line.