This summer has seen a record number of companies withdraw their initial public offerings (IPOs). The latest stock offering to be delayed is the Zynga IPO. Social gaming company, Zynga, announced plans in June to go public in September, but market turmoil, including a catastrophic 600-point Down Jones drop has discouraged the company from moving forward with an IPO. The Zynga IPO is now planned for September.
Founded in 2007, Zynga is the maker behind successful mobile games like:
- Words with Friends.
- Mafia Wars.
- Zynga Poker.
The Zynga vision is to support play time as one of the most popular internet activities and to make it as easy, simple and accessible as possible. Zynga games can be accessed via Facebook, MySpace, Yahoo and devices that support mobile apps.
Zynga has been aggressively developing new games and capabilities. One of their most notable successes was a Facebook partnership in 2010. For the Zynga IPO, the company had hoped to raise between $1.5 billion to $2 billion. Now, however, the date and goals of Zynga’s IPO are uncertain.
More IPO Delays
Zynga is not the only high profile company to postpone IPO plans this summer. Groupon also announced issues with their IPO earlier this month. The key difference between the Zynga and Groupon situation is that Groupon was facing challenges with the SEC due to questionable accounting practices, whereas the Zynga IPO is clearly jeopardized by uncertain market conditions. Companies have withdrawn their IPOs at a higher rate this month than has been seen since 2008, when the global financial crisis began to show its effects and incite investor panic.
Delaying the Zinga IPO is a tragic symptom of the U.S.’s declining economic health. Social media and internet-based companies have been a hot trend for the past few years, and if Zynga has any hopes of continuing their rapid growth and development, they’re going to need funds in a quantity that only an IPO could realistically provide. Unfortunately, almost all planned summer IPOs have been delayed. Those that happened as planned received a lukewarm welcoming to the market and are considered financial flops. Zynga is going to have to weather the financial storm and wait for more favorable market conditions before heading forward with an IPO.