Confirmed: Zynga proposes secondary offering
Zynga confirmed a planned secondary offering today with a Securities and Exchange Commission filing for certain Zynga stockholders to offer shares of Class A common stock. The developer doesn’t receive any proceeds from the sale of the shares.
The CityVille creator uses a three tiered stock system, with Class A having the lowest voting power of the three. The other two stock types hold 98.2 percent of shareholder voting power. According to the filing, the purpose of the secondary offering is to increase the company’s public float. According to an anonymous source in Bloomberg’s initial report, the offering also allows investors to sell some stock while making larger shareholders agree to a longer lockup period that prevents them from unloading shares.
Given how dramatically Zynga’s stock price fluctuates whenever new revenue and traffic figures become public information, it makes sense that it would try to create some stability among its stockholders. The developer’s market cap shot up 12 percent to $8.66 billion from $7.4 billion immediately after Facebook’s S-1 filing. Share prices dropped nearly 18 percent just 13 days later after Zynga’s first earnings call as a publicly traded company. Zynga’s platform announcement earlier this month boosted share price by almost 10 percent. Today, trading opened at $13.44 per share — and looks to be on the rise as news of the secondary offering spreads.
Meanwhile on the traffic front as recorded by our AppData traffic tracking service, Zynga’s daily active users are dipping slightly — down almost 2 percent in the last week to 55.6 million.