Zynga, the biggest maker of games on Facebook, plans to sell shares for $8.50 to $10 apiece in its initial public offering to raise as much as $1 billion, said the person, who declined to be identified because the terms are private. That would value Zynga at as high as $7 billion, less than it previously had targeted, the person said.
The game developer decided against a low float for its stock as companies such as Groupon Inc. and Pandora Media Inc. tumbled following their IPOs, the person said. While selling fewer than 10 percent of their shares helped those companies boost early demand for their offerings, the stocks have more recently dropped below their initial prices.
“It’s a reflection of what we’ve seen in Groupon,” said David Dillon, a San Francisco-based portfolio manager at HighMark Capital Management, which oversees about $17 billion. “If you price yourself too high, you do yourself a disservice in the long term.”
Zynga, whose shares will trade on the Nasdaq Stock Market under the symbol ZNGA, plans to disclose IPO terms tomorrow, the person said. Morgan Stanley and Goldman Sachs Group Inc. (GS) are managing the IPO.
Dani Dudeck, a spokeswoman for San Francisco-based Zynga, declined to comment.
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