NEXON Taking Off
Many 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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