Zynga valued at $5.51bn

It's simply incredible that they can be valued at more than EA considering where they started out.

It just goes to show how influential Facebook is in this generation.

Posted:2 years ago

Given that there is no solid financial data about Zynga's income, costs and profits, I'd say this has more to do with how influential share evaluation analysts are, rather than Facebook.

Posted:2 years ago

Wow...I know these guys have been getting bigger and bigger but this is pretty incredible. But as Tony mentioned this isn't solid financial data..

Posted:2 years ago

Now I don't use Facebook so I'm not totally up to speed on the topic, but I'm not sure I would agree that a company like Zynga are genuinely worth more than EA. I mean, they've got FarmVille, Mafia Wars and FrontierVille (and a bunch of other less successful titles), compared to EA's dozens of multi-million selling established IPs.

EA may be a lumbering giant who is not as flexible as Zynga, but it has adapted to the iPhone generation extremely well and had made clever acquisitions to keep up to speed with regard to Facebook gaming.

Posted:2 years ago

Welcome to the facebook bubble

Posted:2 years ago

If it looks like a bubble and it feels like a bubble it probably pops ... like a bubble.

Analysts are probably looking at social gaming as a whole not at Zynga's assets in particular.

Posted:2 years ago

It will all end in tears. Not that I'm jealous of course!

Posted:2 years ago

Would like to hear what the valuation is based on.
It's not an impossible thought when you compare the development, marketing, distribution etc. spends on something like MoH, MMA, FIFA, Madden and the raft of other titles (Each one easily in the millions).

Compare that to the equivalent spends on Farmville and other Facebook apps. and return on investment can be huge.

That said there's a few law suits running around, they could be leveraged to the hilt and if they get caught out like LOLapps and all the apps get pulled then it could all be over very quickly.

Posted:2 years ago

Surely their valuation must be based on revenues and expected revenues, and this information isn't available. It is a staggering valuation which strikes me as more than a little bit "bubble-ish".

Having said all this unlike the Internet Bubble, Zynga do actually have revenue streams to call on. If and when the bubble bursts, there is likely to be a smaller bubble inside.

Edited 2 times. Last edit by Mark Faulkner on 26th October 2010 1:53pm

Posted:2 years ago

Bonkers.

Posted:2 years ago

I guess the maxim to may hay whilst sun shines .... facebook games are surely a interesting phenomena bubble

Posted:2 years ago

The company has to be making profits if its managing to keep expanding but I do not see this valuation as being close to accurate.

A year ago I had never heard of Zynga, but now a week does not go by that they make the industry news in some shape or form.

Posted:2 years ago

I expect that $360m of investment they have secured since creation has paid for a lot of that expansion. Does feel a bit like the late 90s when e-valuations were crazy and eventually the bubble burst. But a handful of companies actually managed to turn a profit and (excuse the pun) changed the game. Personally I'd want to see their $ numbers before they got any of my hard-earned: I don't care how many virtual stables there are in the US...

Posted:2 years ago

If Facebook was to die a horrible death tomorrow... Zynga would still survive, right?

I have to admit that I played Farmville a lot, a while back. Not anymore, though. I tried Frontierville but really didn't like the way the game was structured. Way too much spamming of friends for items in order to get stuff built.

I thought it was all bonkers just under a year ago - but here we are today with Zynga worth an obscene amount of money (more than EA? WTF!?).

It's looking like a very solid bubble, from where I'm sitting :-/

Posted:2 years ago

Nah - it's got ".COM" written all over it. In suds. :)

Posted:2 years ago

If we are speculating on what would happen if Zynga lost access to FB, they are trying to branch out to other sites and media, so the thought has occured to them as well and interestingly that might level the playing field a little as they try to take on better quality titles.

They've got a lot of capital sloshing around and are expanding. The number of studios they are buying up could be a prelude to bigger and better things. However, they have been caught up in the same mess as LOLapps, they are caught in a class action suit.

If they aren't able to break out to other markets then all the studios they've bought up stop being assets and start being a massive drain. It'll then be a race to see what they can produce depending on the IP they have available. But with the success of Evony, farmville and frontierville may well be the sort or title to break into the China and other lucrative Asian markets.

Edited 1 times. Last edit by Alex Loffstadt on 26th October 2010 4:05pm

Posted:2 years ago

The scariest part to me here is how shallow knowledge you need to become an analyst. Sure, I can believe in the value of google since its the best search engine out there. I can believe in the value of facebook since its the most mass appeal community out there. But zynga, they got to where they are with inferior products and aggressive marketing.
I could of course be wrong, there might be legitimate longevity to this company but in this case I definitely think they need to step up and produce something worthwhile.

Posted:2 years ago

it is also incredible to me that a company that produced a few sub par browser based games can exceed the value of a major global publisher/developer with many established IP's and solid assets (ie development studios around the world). EA, a company thats been going for how many years. They used to be the daddy, now act/blizz are numero uno. maybe its a sign of the times...but i for one will still prefer EA games to any facebook game. the difference for me is i go on FB to as they say "connect" with friends and family from around the world, not bake pretend meals to share with said friends/family. Or start a "mafia war". I would prefer to start a mafia war in real life. or play a real mafia game on a platform designed for the purpose. Shocking

Posted:2 years ago

I'm saddened that a company that produces crap (in my opinion) can be considered to be worth more than a company that doesn't produce (as much) crap. If Zynga is indicative of what the future holds for "gaming", then I want no part of it. I really do hope it is a bubble that'll pop eventually... but I doubt it. It started with the Wii (Nobody will buy it! Well... it's still sitting at the top, 4 years after launch)... and it's still going.

Posted:2 years ago

Not sure about anyone else, but I play games for the immersive experience and to switch off from the web, phones, the social networks and the world around us to have fun. The social aspect of games can only really be appreciated with face to face human contact and gamesmanship during it with friends. Singstar and family Wii games being classic examples. These are "social games"

Theres just nothing socially immersive and engaging about being sat in front of a computer alone. There never will be. It will always wear thin. We shouldnt refer to these apps as social games. If anything, these apps are antisocial experiences. People just dont take memories from this kind of experience either.

Its kinda like.....

"Oh remember the time when I sold you a pig" vs "Remember that time when we were having a laugh and I took you out all night long on Streetfighter 2, round at my pad"

I know what experience I would rather have. :)

Posted:2 years ago

5 Billion Valuation would on a P/E of say 30 indicate a profit of around 166M USD, not impossible with their user numbers. So the evaluation is not that far fetched, the issue is if they are worth the 30X multiple on earnings or not, considering there growth has really slowed on the user side, but maybe they are getting better at monetizing those users to make up for it. So before you say EA should be worth more, lets see EA produce a profit at all this year before we start comparing. Also consider that Disney paid more than $159 per DAU for Playdom (4M DAU) vs Zyngas reported 23M DAU, that would also indicate a value of 3.6Billion, maybe tad more realistic.

Posted:2 years ago

Clearly based on profit estimates... No doubt EA is struggling and needs to become profitable again... nevertheless I agree with everybody sceptic. Just another case of irrational capital markets and overpaid analysts. This is just based on projected estimates I would not bet on a dime. The market is way too volatile and unpredictable...

Posted:2 years ago

While I once belonged to the community of Farmville addicts it wasn't because i considered the game fun in any way, just that if i were to stop playing (and i use the term loosely) for a day then all my 'work' was for nothing. Eventually i didn't play long enough to the point where i felt i would have to start again and I wasn't prepared to (wasn't fun after-all especially on a mac trackpad).

And while I'm by no way saying facebook gaming is a fad or a bubble (I believe its an incredible medium for game demos) but i struggle to see the longevity in a series of games which are not played for the purpose of enjoyment, but rather purely addiction and routine. The process of 'playing' seems to be interwoven with Facebook routine and for me, should people find other forms of entertainment, games like Farmville may lose traffic. Although Zynga will probably have created them as well.

Posted:2 years ago

Buy the rumour sell the fact!

Posted:2 years ago

You're right Barry, if you get involved in facebook games they become routine, just as going on facebook becomes routine. I know of peoples parents who play facebook games every day, a lot of them pay for ingame money and items.

They've been extremely successful during the facebook boom, but it's still hard to believe they are valued at more than EA.

Posted:2 years ago

As many people have already voiced out, I think Zynga's value is mostly bubble. Like mobile game developers and portals were valued at billions back in early 2000 and then POP!

Posted:2 years ago

So on one side we have the value of a privately held company estimated by Sharespost [their website says: "SharesPost is not an investment advisor..." go to http://www.sharespost.com/pages/legal for the full description].
On the other side we have the value of a public company estimated by the nasdaq.

Correct me if I am wrong, but after reading a bit about estimates, the value of EA is estimated on completely different data than Zynga.

It sounds like, while EA share values represent studios, IPs and an outlook on their future based on 30years of company history, Zynga shares represent the price somebody would pay for them based on the (again) estimated value of virtual goods in the future.

Posted:2 years ago

Here comes dot.com mark II. Let's see where they are year from now.

Posted:2 years ago

Comparing EA with Zynga is comparing apples and oranges.
Just as EA ( a well-known and analyzed-to-death company) had to struggle to change with changing markets, Zynga (a newcomer with absolutely no published financial info) will have to contend with real games made by real game companies.

Clearly the upsurge in social (call it antisocial but it's still there and growing) gaming is real. Evidently there is a market for this kind of casual gaming since more than 200 million people play the games.
Is this type of games going somewhere? (as opposed to traditional AAA MMORPGs which clearly are going nowhere and fast). The answer seems to be yes.

Is this a bubble? I think not, because already there are emerging social games with more game content. Zynga itself will have to design better games (or steal them and get sued as they did with nearly all their brands) once the Facebook population tire of their old cow-clicking-psycological-trap-games.

Posted:2 years ago