For Zynga Inc., Christmas arrived early in the form of more than $1 billion raised late Thursday afternoon from the social gaming company's highly anticipated initial public offering.
In one of the year's biggest technology IPOs, the San Francisco creator of FarmVille and other social games is set to begin selling its shares Friday on Nasdaq at $10 a share, giving the 4-year-old technology company a $9-billion valuation.
Although at the high end of what Zynga had suggested two weeks ago, the price was well below what some analysts on Wall Street predicted when the company first filed its initial public offering plans in July with the Securities and Exchange Commission.
At that time, many had predicted Zynga could be worth as much as $20 billion. But then the stock markets went haywire in late August, gyrating by as much as several hundred points a day.
Despite continued market volatility, Zynga filed an amended S-1 with the SEC on Dec. 2 detailing its price range, with a substantially lower valuation than expected.
Max Wolff, chief economist at GreenCrest Capital, predicted that Zynga's shares would rally in the first few hours of trading, then "hit a wall of skepticism" later in the day.
"We've heard a lot of bearish chatter on Zynga," Wolff said.
Some investor concerns pertain to the $1-billion market for social games and its ability to continue its exponential growth, said Michael Cai, a game industry analyst with Interpret, a market research firm in Los Angeles.
"The industry in general faces a number of challenges," Cai said. "Some of that has to do with Facebook, where most social games currently are played. There's some evidence that Facebook's audience growth is starting to slow down. Then there's the challenge of converting free players into paying customers. But if any company can succeed in this space, it's Zynga."