Zynga Investors to Sell $400 Million in Stock
Three months after its initial public offering, Zynga said Wednesday it will sell about $400 million in shares in a follow-on offering, though the money will flow to its large, early investors and not the company.
The move is designed to increase the number of shares in the public float, and, in allowing some shares to sell prior to others, to smoothe out choppy trading associated with the expiration of an IPO lock-up period.
Morgan Stanley and Goldman Sachs are expected to purchase many of the shares and not resell them until after May 28.
Zynga, the maker of Words With Friends, CityVille and other games for handheld devices, went public on Dec. 16 at $10 per share. In midday trading on Wednesday the stock was down 1 percent to $13.28.
"The secondary offering has the potential to be a positive, as it addresses the staggering of the expiration dates of lock-up agreements," said Wedbush Securities analyst Michael Pachter, who has a $17 price target on the stock.