The secondary offering would allow some investors to sell of some stock, while roping large shareholders into a longer lock-up period, preventing them from unloading all of their stock and thus leave Zynga high and dry. According to Bloomberg, the company won't issue new shares.
Sources told Bloomberg that the company looks to avoid the fate of companies like LinkedIn, the social network for professionals, which had its stock price plummet after its lock-up period ended in November. If Zynga were to make a secondary offering, it could keep everyone from selling shares all at once until possibly this June.
However, this report assumes that Zynga's current stock price of $13 and some change will continue to drop or stagnate, inspiring shareholders to ditch while they can still profit. Perhaps a move like this would give the developer a chance to show what it can do with its new Zynga.com platform. Zynga declined to comment.
Do you think it would be smart for Zynga to lock shareholders in for longer? Do you see Zynga.com turning out to be a success? Sound off in the comments. Add Comment.