Zynga Inc., the largest maker of games for Facebook, declined in its first day of trading after raising $1 billion in an initial public offering that gave it a greater valuation than rival Electronic Arts Inc.
The shares, listed on the Nasdaq Stock Market under the symbol ZNGA, fell 5 percent to $9.50. The developer of games such as “CityVille,” “FarmVille” and “Mafia Wars” sold 100 million shares for $10 each, the top end of a proposed range.
Zynga gets more than 90 percent of its revenue from Palo Alto, Calif.-based Facebook Inc. and faces increasing competition from Electronic Arts, which bolstered its own online services by purchasing PopCap Games this year.
Nexon Co., a Tokyo-based maker of games for Facebook , including “Zombie Misfits,” slumped 15 percent this week after raising $1.2 billion in an IPO, Japan’s biggest this year.
“Zynga was offered at a pretty aggressive price relative to other game makers in the marketplace,” said Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank. “Anyone that has any affiliation with social media is getting bought up by an investing public that wants to be involved.
“And then reality hits.”
The offering is the biggest by a U.S. Internet company since Google Inc. raised $1.9 billion in its 2004 IPO, according to data compiled by Bloomberg.
Founded by chief executive officer Mark Pincus in 2007, Zynga doubled sales to $829 million in the first nine months of 2011.
The IPO valued Zynga at as much as $7 billion, or 6.8 times revenue in the year through Sept. 30. That’s more than three times rival Electronic Arts’ price relative to sales over the same period.
