February 02, 2012, 12:10 PM — Shares of Zynga soared nearly 22% Thursday after Facebook's S-1 filing showed the social games maker was responsible for 12% of its revenue last year.
Zynga (NASDAQ: ZNGA) shares climbed early Thursday to as high as 12.91, or 21.8% above Wednesday's closing price of 10.60, before slipping back down to 12.45 by late morning.
The social games company stumbled out of the IPO box in mid-December when it closed its first day of trading at 9.50, below the $10 offer price.
It remained underwater through most of January, hitting a low of 7.97 on January 9.
But last Friday, after rumors that Facebook would be filing its S-1 this week, Zynga shares climbed to 10.25 before closing at 10.05. It gained every day this week before Thursday's big jump.
The 12.91 share price reached Thursday is Zynga's highest since it went public last December 16. So if you were a shareholder who bought at the January 9 low of 7.97 and sold at Thursday's height, you made a profit of 62% in about three weeks. Congratulations to both of you.
In its S-1 filing, Facebook noted the importance of Zynga to its revenue stream and page views:
In 2011, Zynga accounted for approximately 12% of our revenue, which amount was comprised of revenue derived from payments processing fees related to Zynga’s sales of virtual goods and from direct advertising purchased by Zynga. Additionally, Zynga’s apps generate a significant number of pages on which we display ads from other advertisers. If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected.
Facebook said it generated $3.71 billion in revenue in 2011. At 12% of the total, that would make Zynga's contribution about $445 million.
Facebook collects 30% of the revenue from virtual goods sold for Zynga games such as CityVille, FarmVille and Mafia Wars.
But if Facebook thinks its revenue will be "adversely affected" if Zynga goes away, Zynga would be out of business if Facebook went away. The social games company relies on Facebook for more than 96% of its revenue.
Zynga will release its fourth-quarter and 2011 annual results after the market closes on February 14. It'll be interesting to see if it's been able to reduce its heavy dependence on Facebook, although it could only be a matter of degree. Even going from 96% to 80% -- which won't happen -- still would leave Zynga totally reliant on Facebook for its survival.