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Wall Street turmoil is affecting the timing of Zynga’s public debut.
The social-gaming company, which had been racing to launch an initial public offering early next month, is no longer in a rush because of the rocky stock markets, said two sources with knowledge of Zynga’s plans.
In June, Zynga pushed full speed ahead when it filed papers with the Securities and Exchange Commission to raise up to $1 billion. The company was hoping for an IPO as soon as possible, or in early September, one source said.
While Zynga is still pursuing an IPO in earnest, its public debut could be delayed until November, said another source close to the company.
What had been the hottest tech IPO climate in more than a decade is now cooling off. The stock markets have been in flux especially since Standard & Poor’s downgraded US credit earlier this month. Since then more than a dozen pending IPOs have been delayed.
“It wouldn’t be illogical for the bank to delay a sale, given the markets,” said one source. “It makes sense for a bank to protect its clients from a market that could potentially be a bottomless pit.”
The ultimate decision depends on more favorable market conditions, and Zynga hopes to have more clarity after Labor Day, the source said.
Morgan Stanley, the bank leading the IPO, declined to comment. Zynga is restricted from making public comments ahead of its public offering by SEC regulations.
Zynga — profitable and on track for more than $1 billion in sales this year — is one of the most anticipated offerings of the year and is among the crop of emerging tech titans leading the Web 2.0 boom.
The see-saw stock market isn’t Zynga’s only concern. The San Francisco-based company behind games such as FarmVille, CityVille and Empires & Allies is also contending with the SEC’s review of its S-1 filing to go public.
Zynga has already gone through the first round of talks and addressed some of the points raised by regulators.
Like Groupon, Zynga has faced similar criticism for emphasizing some non-traditional accounting measures. For instance, regulators told Zynga to stop touting a metric it calls “bookings” ahead of strict quarterly revenues.
Also, the SEC was concerned with Zynga’s statement in its initial filing that it relied on a small percentage of paying customers for almost all its revenue.
The SEC told the company to divulge more on that point, and in its amended filing Zynga went on to say that less than 5 percent of its hundreds of millions of users actually pay for the virtual goods that enhance game play.
The amended filing did not completely satisfy regulators, and it is becoming a sticking point in this second round of review, one of the sources said.
The SEC is asking the company to provide even more detail on how many paying customers it has for each of its titles — a level of data that Zynga is fighting hard not to share, the source said.