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Some Zynga shareholders are planning to sell up to $400M in stock through offering
SAN FRANCISCO (AP) ' Zynga Inc. says shareholders may sell up to $400 million in stock through a public offering, three months after the online game maker went public, to try to avoid a drop in its stock price.
The San Francisco company said Wednesday that shareholders are selling stock "to facilitate an orderly distribution of shares" and increase the number of shares outstanding.
Early investors typically must wait about six months ' a "lock-up" period ' to sell off parts of their stakes after an initial public offering. The expected wave of share sales can weigh on a newly public company's stock price.
The company said it was releasing the selling stockholders from the lock-up, which was set to end on May 28. Zynga said selling shareholders, which could include company directors and executives, will enter longer lock-up agreements after this stock sale.
Zynga went public in mid-December at $10 per share. The stock closed at $13.38 on Tuesday and added 13 cents, or 1 percent, to $13.50 in premarket trading Wednesday.
The company has about 721 million shares outstanding, according to FactSet, and a market capitalization of $9.6 billion.
Since only shareholders will sell stock, Zynga won't receive any proceeds from the offering.
Morgan Stanley and Goldman Sachs are managing the offering.