Analysts and investors had expected Zynga to raise the price or boost the number of shares it was selling, since demand had seemed strong in recent weeks. The IPO, from the maker of "CityVille" and "FarmVille" games, has been highly anticipated because it is seen as a way for investors to get a slice of Facebook's growth before the social network goes public itself.

Zynga sold 100 million shares of Class A common stock at $10 per share in the IPO, the top end of the $8.50 to $10 indicative range.

In addition, certain of Zynga's stockholders have granted the underwriters a 30-day option to purchase up to an additional 15 million shares to cover over-allotments, Zynga said in a statement late on Thursday. Zynga will not receive any proceeds from the sale of shares by the selling stockholders.

Zynga publishes four of the top five games played on Facebook and has more than 200 million monthly users. Facebook, which takes a 30 percent cut of the revenue Zynga makes on its platform, is expected to go public next year.

"They could have easily raised the size and the price. I expect it to trade strongly when it opens," Scott Sweet, an analyst at IPO Boutique, said of Zynga.

The IPO, equivalent to about 11 percent of diluted shares, values Zynga at $8.9 billion. The company had been valued at roughly $14 billion in November, according to an internal estimate in a regulatory filing.

At $1 billion in proceeds, Zynga's IPO would still be the largest from a U.S. Internet company since Google Inc raised $1.9 billion in 2004.

Zynga and the lead underwriters on the deal, Morgan Stanley and Goldman Sachs, declined to comment.

Zynga, which is profitable, generates revenue from less than 3 percent of its players, who buy virtual items like trucks and poker chips in its free games.

Others said Zynga wanted to play it safe with the IPO given the volatile financial markets and what happened to another online game company, Nexon, whose shares fell on their first day of trade in Japan this week.

"The market's been pretty tough this past week, so they probably took a more conservative approach," said Dan Niles, chief investment officer of AlphaOne Capital Partners.

Groupon Inc, another closely watched Internet IPO this year, jumped on its first day of trading in November, but slumped below its $20 issue price about three weeks later.

But unlike Groupon, Zynga is profitable. It posted net income of $12 million during the third quarter and is on track to make $1 billion in revenue this year. But profit growth has been lumpy as the company invested in new games.

Greencrest Capital analyst Max Wolff said Zynga's shares on Friday "could easily go to $12 and change," before stabilizing.

CHALLENGES AHEAD

Zynga's near $9 billion valuation is less than videogame maker Activision Blizzard Inc's $13.6 billion market capitalization and higher than Electronic Arts Inc's $6.9 billion, even though they earn much more in revenue.

Zynga is valued at nine times its sales for the last 12 months, while Activision's multiple is three times its 12-month sales, reflecting the growth potential investors see in online social games.

While Zynga's exposure to Facebook could be enticing to some investors, it also poses a major risk. In the future, Zynga will have to show Wall Street that it can diversify and make money from mobile and other new ventures.

Zynga now generates 95 percent of its revenue from Mark Zuckerberg's social network. If Facebook's user growth slows, Zynga's growth is likely to lose momentum as well. Zynga's growth rate of bookings, which is the money it makes upfront when its users buy items, is also slowing, raising concerns among investors.

"It's not a trend that seems to be stabilizing yet. We believe investors will likely question Zynga's premium valuation," said Sterne Agee analyst Arvind Bhatia in a research note.

Another concern analysts have cited is Zynga CEO Mark Pincus' influence over the company. He owns a special class of C shares that carry 70 times more voting power than regular A shares. This is high compared to many other companies. LinkedIn Corp, for example, has a 10-1 voting ratio.

Still, Greencrest Capital's Wolff said investors may look past Pincus' controlling stake because of the company's dominance on Facebook.

"While there are a lot of reasons to be skeptical about the company, including Mr. Pincus' 70 (times) share class voting rights, the bottom line is they have five of the top six games (on Facebook)," he said.

(Reporting By Liana B. Baker in New York and Alistair Barr in San Francisco, Additional reporting by Sinead Carew in New York, Alexei Oreskovic in San Francisco and Sakthi Prasad in Bangalore; Editing by Bernard Orr)

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