NEXON IPO – The Korean ZYNGA

NEXON Taking Off


NEXON NEXON IPO The Korean ZYNGAMany investors are frothing at the mouth in anticipation of the Zynga IPO, but how many of them have ever even heard of Nexon ? Well they better learn the name and learn it well.

Nexon is a Tokyo based publisher and developer of online games. Nexon was founded in South Korea in 1994 and only recently moved it’s HQ to Japan. Now I will be the first to admit that I am not exactly a gamer. I don’t know how to play Zynga’s Farmville and I have no clue on the functions of NX cash. But what I do know, is that Nexon has the potential to be a money making machine.

Back in April, Morgan Stanley and Goldman Sachs were hired as investment bankers for a potential Nexon IPO or rounds of financing. Nexon currently offers 30 plus different games with online roll playing game MapleStory being it’s most well known. The Zynga alternative has also reached more than than 1.1 billion players.

NEXON and ZYNGA Battling


Now let’s talk about revenues, many tech savvy industry insiders feel that Nexon is on pace to pass the $1billion revenue mark for 2011. These numbers are even more impressive considering that they have barely scratched the surface in North America, which is now their fastest growing market. But here is the key and it’s pretty simple. Nexon doesn’t rely on Facebook as heavily as it’s competitor Zynga does. In other words Nexon isn’t as impacted by paying Facebook credits as Zynga is.

Now at PSE we often provide quality color on IPO’s and secondary offerings, and it wouldn’t surprise many if both Zynga and Nexon were 50 or 60x oversubscribed when and if they go public. Just keep in mind that market conditions will obviously play a factor in when either of these deals actually trade, and right now these conditions are uncertain. I also hate to end on a sour note, but Nexon is an Asian company, and based on the performance of some of the recent super hot Chinese IPO’s, aftermarket trading will be volatile. Newer China based deals have been smashed recently, and the market has taken back the first day pops and then some, but regardless of your bias, add Nexon to your potential IPO list.

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Zynga IPO Plays under $6

Zynga IPO


Here are a few names that all trade under $6 that could potentially attract some attention because of the massive interest in the Zynga IPO.

Glu Mobile (GLUU:NASDAQ) This small cap gaming play has been a volatile trading stock for many, and a speculative core holding for others. The company has published games like Call of Duty and Guitar Hero 5 on mobile phones and tablets. GLUU has a small market cap and has been a takeover rumor stock recently. GLUU’s valuation is often brought up frequently in relation to the Zynga IPO.

Mad Catz Interactive (MCZ:AMEX) This Amex penny stock basically produces controllers and other accessories for the gaming industry. MCZ also has a strong relationship with Microsoft (MSFT:NASDAQ). MCZ doesn’t necessarily have the hottest story in relation to true gaming plays, and maybe that is why shares are trading away from 52 week highs. Although, I would still add MCZ to your AMEX best penny stocks to buy watch list.

Cascadia (CDIV:PK) We have touched on this zombie stock many times here at PSE. At this point, there is no Zynga play on this once heavily traded penny stock. There is far too much negativity surrounding CDIV shares since it’s recent halt of trading. Some former CDIV longs could get sucked back in, but you shouldn’t be one of them. Even the Zynga IPO probably can’t help this one.

Majesco Entertainment (COOL:NASDAQ) Majesco is always mentioned when social media stocks come into play and the stock has made a major reversal off of it’s 52 week low. COOL has a small market cap and is already profitable which obviously raises the comfort level of speculative investors. The next earnings release is not until the fall, so getting the typical gaming stock sell off on earnings is off the table for now.

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Zynga IPO

***ZYNGA IPO UPDATE***


The Zynga IPO, as many of you already know, is already being talked about by some, as the most sought after IPO in the last few years. On a pure interest basis, comparisons are to be Google (GOOG:NYSE) are already being made. Especially with the recent demand for other tech related IPO’s.

As some of our followers know, we make an effort to highlight some high profile public offerings, and we give color on other lesser known investment banking deals as well, but the Zynga IPO is different, much different from other deals.

Recently, some of you have watched tech IPO’s like the LinkedIn IPO (LNKD:NASDAQ) and the Pandora IPO (P:NYSE) have huge pops, but only fall back after institutions and IPO flippers came out of their allocations. The reason for the declines of the two stocks mentioned above is pretty simple. Their fundamentals don’t match the market caps for the short term. Short sellers know that even a booster shot buy recommendation from a brokerage firm can only do so much for a stock price. This is why many hedge funds short these deals when borrows become available.

Zynga’s IPO is unique though. Look at a company like Pandora, even the CEO can’t tell you when they are going to be profitable. With Zynga, it’s obviously different. Their presence on Facebook is huge and still growing. The revenues are also off the charts already and it’s not unreasonable for some to say that Zynga could eclipse the$1 billion mark in revs in the next couple of years.

Zynga’s user base is also extremely loyal even in the competitive gaming space. Games like Farmville, Cityville and Frontierville keep users coming back. Zynga’s solid brand and management also has something to do with the present valuation talk being in the $20 billion range. Keep in mind that most experts felt Zynga was valued in the $10 billion range at the time of our initial Zynga IPO profile entry.

So get ready for the hype to begin as the deal is rumored to trade in the fall. Even though Zynga’s IPO offering will be larger than some of it’s recent tech predecessors, shares will be extremely limited for retail accounts. In other words, for a deal of it’s size, Zynga will be oversubscribed to epic proportions. So please don’t be disappointed or mad at your broker if you are shutout.

Original ZYNGA IPO post below:


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Zynga IPO Gonna be Hot


zynga ipo Zynga IPOSan Francisco based social networking game developer Zynga is rumored to file for an IPO in the very near future.I has almost 250 million Facebook users and 4 of its most popular games are City Ville, FarmVille, FrontierVille and Zynga Poker. On Tuesday, Zynga just released it’s new game Empire and Allies. A move that some feel is geared towards creating even more interest in Zynga’s IPO stock offering.

In the past few months we have seen a slew of red hot IPO’s come to market, especially in the social networking space. LinkedIn IPO (LNKD:NASDAQ) was the latest, and despite the fact some are calling for a bubble in the space, it’s probably safe to say that the Zynga IPO will be heavily oversubscribed. Zynga already has roughly 250 million active Facebook users who frequent their games. The company has also been recently valued in the $10 billion range, and is rumored to have Morgan Stanley and Goldman Sachs in the running to be the lead underwriters.

Zynga Already has Profit which should help the Zynga IPO


The difference from Zynga IPO and some other the past social networking IPO’s is that Zynga already did $850 in revenue last year. The number is simply mind boggling. As we have said in the past getting shares of such a hot deal will be next to impossible on a retail basis, and that’s considering that Zynga’s IPO offering size could be considerably larger than many of the more recnt IPO’s in the space. So the best way to play it may be buying other gaming companies in anticipation of the offering. The hype from this deal could potentially move several stocks that range from mid caps all the way down to penny stocks.

So stay tuned, we will try to highlight a few different names and point out others on our stocks to watch list.

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