Facebook yesterday filed S-1 papers with the US Securities and Exchange Commission, a move that brings the social network one step closer to a long awaited initial public offering (IPO). Some analysts have speculated that Facebook, which currently has a membership of upwards of 800 million, could be valued at close to $100 billion – the largest ever for a tech IPO.
That's good news for Facebook employees, obviously. But it's also good news for Zynga, the social gaming powerhouse, which saw shares soar by as much as 14 percent in trading on Thursday morning. So why Zynga? Well, because Zynga titles such as FarmVille and FrontierVille have been historically very helpful in filling the Facebook coffers.
Consider the recently-filed S-1 papers, which show that a whopping 12 percent of Facebook's revenue last year came from Zynga games – a serious chunk of change, no matter which way you slice it.
"Zynga is so important to Facebook that it is cited as a risk factor [for Facebook], with Zynga accounting for 12 percent of Facebook's 2011 revenues," reps for the market research firm BTIG Research wrote to investors yesterday, according to CNET. "Twelve percent equates to about $445 million of Facebook's 2011 revenues, including Facebook's share of Zynga gamers' virtual currency purchases and Zynga's advertising purchases on the Facebook platform."
Interestingly, it's not just Zynga that has benefited from news of the impending Facebook IPO. As Rex Crum of MarketWatch writes, shares of Pandora, Groupon, and Linked In – all companies, like Zynga, that recently went public – also spiked today. The Facebook filing, Crum notes, seems to have temporarily given the Web 2.0 sector "a boost."