New SEC Filing Puts Zynga Valuation at $11B

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Zynga has an internal valuation of $11 billion? They must be smoking what they're growing down in FarmVille. :eek:

"In March 2011, we obtained a third-party valuation report that used recent arms length transactions in our stock as the primary indication of value. These transactions indicated a valuation of $11.15 billion based on fully diluted shares outstanding," the filing with the U.S. Securities and Exchange Commission said.
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How are they worth so much :confused:

Even if every single person whos ever made a junk account on facebook (apparently 500 million...which is a load of crap) spent $22 on their games. With most accounts on that site being dead or spam every single active facebook user would have to be earning them $200 or something...
 
we can call this the internet2 bubble or the social network bubble either way its a bubble and it will pop soon enough
 
adds, it all about the adds. Those companies that let you sign up for and in return you get 51324786851 extra whoopie coins are probably paying out nice dividends to zynga.

I never put a dime into zynga or supported the adds. Not exactly sure why anyone would.
 
Zarathustra[H];1037622543 said:
Am I the only person who's never heard of Zynga before?
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Ever heard of a facebook game? Yeah they basically have a monopoly on that.
 
The GF plats FV, and Zynga is getting desperate ! Recently they've sent the cost of items through the roof, the desirable items cost REAL $ (not in-game coins) and the players are leaving in droves. Add to that, every week or two a new hack comes out and the players stockpile as many items as they can, and gift as many as they can. Oh and the GF has at least 20 accounts just so she can take advantage of the gifting and promos. That 11 billion valuation may be true, if you're talking FV coins, but real money ? pfffft !
 
NickJames said:
Ever heard of a facebook game? Yeah they basically have a monopoly on that.
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Ahh..

Because of security concerns I have completely disabled Facebook's application platform on my account, so I never encounter any Facebook apps or games.
 
DeathPrincess said:
How are they worth so much :confused:

Even if every single person whos ever made a junk account on facebook (apparently 500 million...which is a load of crap) spent $22 on their games. With most accounts on that site being dead or spam every single active facebook user would have to be earning them $200 or something...
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That's because you are confusing actual earnings with stock evaluation.

Stock gets its value from how investors expect a company to perform in the future, not from how it has performed in the past, or how it is performing now. The past and present do play in as they are used to predict the future, but its the future that matters.

Essentially, they are saying that they market capitalization, defined as the total value of all outstanding shares is $11 billion. This does not mean that they have earned $11 billion.

This is likely based on investors noticing their market dominance in a very fast growing market, and think that in the future the company will do very well, and may pay out some great dividends.

I think part of Zyngas income probably comes from their pimping out of peoples data, not just from straight ad income. Remember, whenever you use an application/game/meme on Facebook, the maker of that game gets your personal info AND the personal info of all of your contacts (unless they have intentionally disabled sharing data to friends applications, which most don't cause they don't even know that this option exists buried in the privacy preferences.)

Most facebook game/app/meme makers are not in it for the game/app/meme or the money they can legitimately earn from those things. They want your data so they can sell it to the highest bidder.
 
heatlesssun said:
Relevant in the sense that free markets can do a LOT more damage to an economy than any politician could possibly hope to do.
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You are so wrong.

You mean like when the government forces banks to loosen lending restrictions and creates a housing/lending bubble? Its when the government interferes that things go to shit. Left to itself, the free market always corrects itself. The first dot.comb bubble fixed itself in just a couple of years. We will feel the housing bubble (federal government created) for many years to come.

Zynga isn't worth $11B and any jackass with half a brain knows this. Greedy people with too much money and no common sense will be all over it and lose their ass. Self-correction applied.
 
So pretty much each and every internet company in existence today is worth no less than 5 billion dollars?
 
FragMagnet said:
The GF plats FV, and Zynga is getting desperate ! Recently they've sent the cost of items through the roof, the desirable items cost REAL $ (not in-game coins) and the players are leaving in droves. Add to that, every week or two a new hack comes out and the players stockpile as many items as they can, and gift as many as they can. Oh and the GF has at least 20 accounts just so she can take advantage of the gifting and promos. That 11 billion valuation may be true, if you're talking FV coins, but real money ? pfffft !
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I don't know about any hacks personally, but I do know there are hacks in the games. The trying to ding players into spending real money? Too true. It's constant, the popups to buy whatever game cash, the cost of the "good" stuff going crazy high and at the same time the games are so buggy and flawed it's ridiculous. It's the bugs and glitches and constant game changes (that benefit Zynga, not the players) that are causing a ton of people to drop games.

Now someone has to pay for the roof-top dog run and the themed cafeterias in their new HQ - http://www.businessinsider.com/zyngas-new-headquarters-will-have-a-dog-run-on-the-roof-2011-6 and Pincus isn't going to pay for it - he expects the "whales" to do so. And there are some people who spend hundreds of dollars a month on games.

I think it's where some of the F2P with real money content got the idea. It's worked pretty darned well for Zynga. Like the $500 gun, you know somebody's going to buy the thing.

The letter Pincus sent out to prospective shareholders is hilarious given the nasty stunts they've pulled (got caught selling user info; their game toolbars that want permission to read your FB message inbox, not only track you online but maintain your history and even "read" your browser bookmarks) and the constant nagging to spend money: http://blogs.wsj.com/deals/2011/07/01/zyngas-ceo-letter/

Now, is Zynga really worth $11B? No, not in actual money, I can't believe that. I can't believe that many people are crazy enough to buy stock in the company and I don't think the IPO was that big of an offer, what was it, a 10% offering? I note that they did amend their IPO and that GOOGLE is one of their investors and we know Google has money. Thought they had more sense. Just what Google+ needs - bring Zynga over from FB and you've got .. another FB! And Zynga will lose more players who don't want to start over.

Anyway, for td:dr - http://www.forbes.com/sites/benzing...t-comes-zyngas-i-p-o-then-zyngas-d-e-m-i-s-e/
 
I've never played any of their games; but it just seems that this type of business model doesn't have long term viability. Thus $11B seems ridiculous.
 
Monkey God said:
You are so wrong.

You mean like when the government forces banks to loosen lending restrictions and creates a housing/lending bubble? Its when the government interferes that things go to shit. Left to itself, the free market always corrects itself. The first dot.comb bubble fixed itself in just a couple of years.
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I've worked in banking for 15 years and two years SPECIFICALLY in home mortgage loss mitigation for one of the nations largest mortgage lenders. I've seen the proprietary data that we have for these mortgages has I developed workout applications for troubled home borrowers. So this problem WAS my job and I still have friends that work in this area.

Yes there was some minor political pressure applied to some banks to expand lending to lower-income folks. But by in large the underwriting standards of those loans were solid, most WEREN'T sub-prime and many that were sub-prime were even Fannie or Freddie loans. Indeed a lot of the sub-prime loans were underwritten and totally financed privately and weren't even subject to federal laws.

The bottom line is that anyone wanting to say that the CRA or government interference on the side of lending to lower-income folks had much to do with the mortgage meltdown, well, they simply are making that up. Now where government DID have a big part to play in the problem was in the secondary market, the GSE's. The GSE did help enable PRIVATE mortgage companies to lower their standards VOLUNTARILY because they could make loans at VERY high rates and fees and sell them to the GSE's and dodge the risk.

TwistedAegis said:
/facepalm

Sincerely, someone in lending and compliance.
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Tell me about it. I've heard so many fairly tales about the hosing meltdown from people that have never worked in banking and mortgage and it's no wonder these things happen because people have NO CLUE how the financial system ACTUALLY works. They look at EVERYTHING ideologically and don't even bother to try to understand the process. A process that I was PAID to understand so yeah, I know how it works.
 
heatlesssun said:
Tell me about it. I've heard so many fairly tales about the hosing meltdown from people that have never worked in banking and mortgage and it's no wonder these things happen because people have NO CLUE how the financial system ACTUALLY works. They look at EVERYTHING ideologically and don't even bother to try to understand the process. A process that I was PAID to understand so yeah, I know how it works.
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I actually worked in sub prime lending, for a top5 national bank, in a market that has consistently been in the top 3 foreclosures per capita nationwide, during the meltdown. I was literally on the front lines watching desperate people come in trying to refi. I remember getting on a conference call, announced the day before, when underwriting guidelines were changed across the board and our warehouse lending lines were cut off, only 24 hours notice. We had brokerages with 50% first month delinquency rates and this was only February of '07.

And if you think brokerages were somehow working at the behest of the government, well, you don't know brokerages. Honestly I only worked subprime 6 months (banking for the past decade), and I think the slimiest, immoral and downright criminal professions are mortgage brokers. Yes there are many good ones, but holy shit there are quite a few atrociously bad ones that can destroy people's lives.
 
TwistedAegis said:
And if you think brokerages were somehow working at the behest of the government, well, you don't know brokerages. Honestly I only worked subprime 6 months (banking for the past decade), and I think the slimiest, immoral and downright criminal professions are mortgage brokers. Yes there are many good ones, but holy shit there are quite a few atrociously bad ones that can destroy people's lives.
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Third-party originations caused banks a TON of grief. There was simply too much motive to get the loan done, collection the origination costs, take none of the risk and then move on to the next "customer".

It's amazing how little the nation has looked at this problem, from the FACTS and not the politics of it. Mortgage lending suffered SO many failures at EVERY level in the process. Buyers, appraisers, brokers, home builders. banks, the Fed, GSE's, everyone. The system failed in almost every imaginable way and that failure was driven by ONE thing, pure unadulterated GREED.

Blame poor people all you want but it'll happen again when you ignore the true problems.
 
Even the poker sites were overvalued throughout their history and they didn't rely on ads or any other form of shitty monetizing.

They straight printed money themselves and weren't worth the wacky numbers being thrown around.
 
heatlesssun said:
They look at EVERYTHING ideologically and don't even bother to try to understand the process. A process that I was PAID to understand so yeah, I know how it works.
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Well I think idealogically that its not right to charge people intertest on money that never even existed in this first place. And then when people can't make those payments the bank then takes posession of a physical good and is able to sell it for actual money. If you pay off the loan the bank got something for nothing and if you default the bank got something for nothing.

I think idealogically it is not right to be in perpetual debt in that by and large the VAST majority of all the United States money is created from debt when the government takes out loans from private banks in order to create money (because the government isn't allowed to make money itself thanks to the creation of the Federal Reserve). And that because its a loan and we have to pay interest back but the money we have came from the loan, thus there isn't enough money to pay back the principle AND the intertest.

I think idealogically its not right that poeple are able to make incredibly large bets that someone WONT be able to pay their debt and then when the shit hits the fan and those large bets are right but the company that took the bet didn't physically have the money to pay that they lobbied politicians to get a bailout to use tax dollars to pay those who placed the bets.

I think ideologically its not right that banks could hide crappy investments behind insurance companies that had AAA ratings so that the crappy investments now have AAA ratings which then allowed investors to take peoples retirement funds and dump it into these crappy investments that from the begining looked bad, but would make a killing for the people who were betting against it.

I'm not educated in finances. I'm just a public tax payer. My ideals are all I got and they tell me that banking, in the way its been for the last couple hundred years, is the most parasitic and immoral industry on the planet. They even make the drug cartels look like honest wage earners.

But like I said I'm just a tax payer. I don't make the rules. I just clean up afterwards.
 
How did you guys get on subprime lending?

$11B overrated? Probably. But as someone pointed out, stock price is based on future earnings, typically 10 years worth of future earnings. There are 750 million Facebook accounts. If everyone of them spent $1.50 per year on Zygna games or generated that much in ad revenue, that would equal the valuation. Seems more reasonable when you put it in this perspective.

I personally have never clicked on any Zynga ads or purchased anything, but all it takes is one of your friends to rack up some bills with them and that valuation pays off.
 
westrock2000 said:
Well I think idealogically that its not right to charge people intertest on money that never even existed in this first place. And then when people can't make those payments the bank then takes posession of a physical good and is able to sell it for actual money. If you pay off the loan the bank got something for nothing and if you default the bank got something for nothing.
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What do you mean by this? Money that never existed?

If I want to buy a house from John Doe for $100,000, but don't have the cash to do it, I get a loan from the bank, who then pays John Doe for the house. The bank does pay money.

If you pay off the loan, the bank is just getting the money they lent you ($100,000) back, plus interest (at a pretty darn low rate). When the market tanks and the buyer defaults, the bank is stuck with a house that is likely worth far less than they lent the person to buy it. So how are they getting something for nothing?

Not trying to be confrontational, just don't really understand what you mean. Apologies if I am just totally missing your point. I am tired and it has been a long week. :)
 
The_Law said:
Not trying to be confrontational, just don't really understand what you mean. Apologies if I am just totally missing your point. I am tired and it has been a long week. :)
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Hey no problem there. You probably just don't quite realize where the "money" in our country comes from. The vast majority of money comes from Fractionalized Reserve Banking. This is why it was so important (in some peoples opinion) for us to get away from the gold standard and create the Federal Reserve. Its also become even more important to get us into using checks and debit cards instead of actual currency.

Heres a great video that explains Fractionalized Reserve Banking. But think about this. You deposit your money into the bank. You always have the right to get that money out. So that money is always there for you. So how can the bank have your money always available to you and still be able to loan $100K to someone else, and pay for their operating costs, and still have "free checking". The answer is Fractional Reserve Banking aka making money out of nothing (or making money from debt to be specific).

http://www.youtube.com/watch?v=Dc3sKwwAaCU
 
westrock2000 said:
Heres a great video that explains Fractionalized Reserve Banking. But think about this. You deposit your money into the bank. You always have the right to get that money out. So that money is always there for you. So how can the bank have your money always available to you and still be able to loan $100K to someone else, and pay for their operating costs, and still have "free checking". The answer is Fractional Reserve Banking aka making money out of nothing (or making money from debt to be specific).

http://www.youtube.com/watch?v=Dc3sKwwAaCU
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The first minute of that video pretty much told me where it was going. I do believe that Wilson has been taken out of context a lot about the Fed he actually supported the idea and didn't all of a sudden think it was some great evil.

Banks are for profit organizations, we can lend money because we actually make money on loans and services. Core retail banking isn't all that opaque. However some of the more entotic stuff is extremely opaque, like default swaps. Indeed they can get so opaque that a lot of banks got out of those types of businesses.
 
Monkey God said:
The first dot.comb bubble fixed itself in just a couple of years.
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Fixed itself how? The dot-com bubble inflated housing prices to unheard of levels, and those prices have not come down, sure they may have stopped growing as much, but take it from someone who lives in the area, where a shitty 1250sqft house still has a value upwards of $700k and that in this depressed housing market... in a city where if you make less than 70k per year you are classified as low income.

I'm sorry, you can complain about how government fucks things up six ways to Sunday, but the fact of the matter is that the whole "financial sector" has done untold shit with our economy from speculators who can buy and sell futures stuff which they never actually own, to those who put value where there is inherently none.
 
heatlesssun said:
The first minute of that video pretty much told me where it was going. I do believe that Wilson has been taken out of context a lot about the Fed he actually supported the idea and didn't all of a sudden think it was some great evil.

Banks are for profit organizations, we can lend money because we actually make money on loans and services. Core retail banking isn't all that opaque. However some of the more entotic stuff is extremely opaque, like default swaps. Indeed they can get so opaque that a lot of banks got out of those types of businesses.
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So then you didn't watch it. So you are saying that Fractional Reserve Lending does not allow banks to "loan" money that didn't exist before? That when a bank loans out $1 that that $1 came from the left overs of income generated through services, much in the same way that if a family member comes to me for $1, I can only give them a $1 that is left over from my income minus my expenses?
 
By the way I am not arguing your points of making money off of loans and services. What I am argueing is the way in which the funds for those loans are created and the banks ability to gather money from it. Not just at the personal level of me wanting to buy a house, but at the public level of the government having to borrow the very money that we use from the private banks.

He who controls the money controls the......
Can't have much more control then being the creator
 
westrock2000 said:
By the way I am not arguing your points of making money off of loans and services. What I am argueing is the way in which the funds for those loans are created and the banks ability to gather money from it. Not just at the personal level of me wanting to buy a house, but at the public level of the government having to borrow the very money that we use from the private banks.

He who controls the money controls the......
Can't have much more control then being the creator
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Money, whether it be gold or dollars is in simplest terms a representation of the value of the goods and services in an economy. Even with a gold standard you'd have to price it in such a way that there's enough of it to backstop the economy. Can paper money be created out of 'thin air'. Of course, that's why we have a central bank. I honestly don't see how gold would be significantly different. Yes, you can't create it out 'thin air' with current technology but you'd still need a central arbiter to price it so that there's an adequate amount of it to represent the economy.

Government doesn't create wealth, it merely prints the money that represents it.
 
westrock2000 said:
Hey no problem there. You probably just don't quite realize where the "money" in our country comes from. The vast majority of money comes from Fractionalized Reserve Banking. This is why it was so important (in some peoples opinion) for us to get away from the gold standard and create the Federal Reserve. Its also become even more important to get us into using checks and debit cards instead of actual currency.

Heres a great video that explains Fractionalized Reserve Banking. But think about this. You deposit your money into the bank. You always have the right to get that money out. So that money is always there for you. So how can the bank have your money always available to you and still be able to loan $100K to someone else, and pay for their operating costs, and still have "free checking". The answer is Fractional Reserve Banking aka making money out of nothing (or making money from debt to be specific).

http://www.youtube.com/watch?v=Dc3sKwwAaCU
Click to expand...

I actually do understand fractional share banking, and now I get where you are coming from. I was just a bit thrown when you said the money never "existed." I don't know that I have ever heard the system characterized that way. I don't know that I necessarily agree with all of your viewpoints, but I will say that I think the federal reserve is a joke.

Back on topic. Me thinks the investor that buys into Zynga at this valuation will regret it at a later date.
 
images
x 1100000000

so much money, i can't wrap my head around it.
 
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