Is Nexon’s Lukewarm IPO Reception a Bad Sign for Zynga?

Nexon, an Asian rival to U.S.-based Zynga, has raised $1.2 billion in an initial public offering that took place yesterday on the Tokyo Stock Exchange.

Zynga is expected to follow Nexon out later this week, and is seeking to raise $1 billion in a U.S.-based public offering.

The two companies have a lot in common.

Nexon, which is known for games such as MapleStory, has profited off the “freemium” model, in which games are given away for free and monetized through virtual goods. The 17-year-old company operates mostly in Asia today, but increasingly it is launching games on Facebook and Apple’s iPhone and iPad in the U.S.

Zynga, which has only been in the market for four years, is on target to have the largest Internet IPO in the U.S. since Google. Nexon’s IPO was the largest in Japan this year.

But today, Nexon received a less-than-stellar public reception, with shares falling marginally in early trading.

Still, it’s not clear that Zynga will share the same fate.

Many analysts attributed Nexon’s early morning decline to general economic weakness, which has plagued the Tokyo stock exchange for a while. Another analyst told Reuters that Nexon was priced fairly and therefore a big lift wasn’t expected.

In many respects, Zynga has very similar ambitions to Nexon. Not only is it seeking to raise about the same amount of money, it is also asking for the same valuation.

Following its public offering, Nexon’s market capitalization totaled at 553 billion yen, according to The Wall Street Journal. In U.S. dollars, that translates to about $7 billion. If Zynga is able to sell one billion shares at the top end of its range, it would be valued at the same amount.

Still, that’s down from earlier this year, when Zynga was privately valued at as much as $10 billion.


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work