Why Is Zynga Rushing Towards Its IPO?

The IPO window is now wide open, with everyone from Zynga to Groupon
rushing towards it. Nobody knows how long that window will stay open
(rule of thumb is 18 months), so better go public while you can. But
today’s IPO filing from Zynga came particularly fast. According to one
source, the actual writing of the 150+ page S-1 document was one of the fastest documentation processes for an IPO of this size, only taking two to three weeks.
CEO Mark Pincus abruptly cancelled a planned appearance at the D9
conference at the beginning of June, adding to speculation that was when
Zynga decided internally to go ahead with the IPO. The three-week
period referenced above was the time between what is known as the first
“org meeting” with bankers and the final document filed today.
Zynga’s financials are strong,
so they could really get the IPO process anytime they want. But there
is definitely a sense that the urgency level picked up all of a sudden.
One theory—and it is only a theory at this point—is that Facebook may be moving up its own internal IPO schedule. It just added Reed Hastings
to its board, and there is speculation that it may have already kicked
off its internal process to get ready for an IPO. This would still be
very early stages, but it would include getting its financial reporting
in order if it hasn’t done so already and starting the board process to
get it to sign off on looking for investment bankers.
If Zynga caught whiff that Facebook was starting to take actual steps
towards an IPO, it might want to get out ahead for several reasons.
One is that it has a good chance at becoming the most sought-after new
Internet stock. (It’s financials are much cleaner than Groupon’s). But
that position will be short-lived and will last only until Facebook
itself IPOs. In the interim, Zynga’s stock will suck up a lot of the
demand for publicly-traded Internet growth stories.
Another reason is that if the Facebook IPO is as well-received as
everyone thinks it will be, Zynga could benefit from an expansion of its
PE multiple (and stock price) just as a halo effect. All Internet
stocks could do well when Facebook goes public, but you have to be
public in order to benefit from that.
Or maybe Facebook has nothing to do with it, and CEO Mark Pincus just
wanted to get the filing out before the 4th of July holiday. What do
you think?