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Zynga said that the valuation it’s seeking in an initial public offering is 50 percent less than an August fair value estimate after it took into account recent IPOs that have underperformed.

The price range of $8.50 to $10 a share is based on “a review of the offering price and recent aftermarket performance of companies that completed IPOs in 2011,” the company said in a regulatory filing on Friday.

The top end of Zynga’s offering range would value the company at $7 billion, or half the $14.1 billion it said represented its fair value as of August. Groupon, the Chicago-based provider of online coupons, raised $805 million in its IPO last month including an over-allotment option. The shares surged as much as 31 percent in the first weeks of trading before plunging as much as 42 percent from their high.

Angie’s List, the Indianapolis-based operator of a consumer-reviews website, raised $132 million in its IPO last month, including an over-allotment. The shares tumbled as much as 29 percent from a high in public trading.

Groupon and Angie’s List both have recovered this month.

San Francisco-based Zynga’s offering of 100 million shares, set to price on Thursday, would be the biggest by a US Internet company since Google went public in 2004, Bloomberg data show. Zynga may raise about $889 million in the share sale to spend on developing new games and possibly buying companies or technologies, according to its filing.

Zynga had originally planned to seek a higher market value in its IPO, and scaled back after Internet companies including Groupon sank following their debuts, a person with knowledge of the plans said this month. Zynga said its IPO price “was not determined using the methodology used by management and the third party valuation firm to value our stock in August.”

Investors have already put in enough orders to cover all the stock being offered, people familiar with the matter had said on Thursday.

Filling the orders for Zynga’s shares a few days into the roadshow is a good sign, said Lise Buyer, principal of the Class V Group, an IPO advisory firm in Palo Alto, California.

“They’re off to a promising start,” Buyer said. “But it’s way too early to draw any conclusions because an indication in the book is not a commitment. If the euro zone falls apart on the 9th, all bets are off.”

Morgan Stanley and Goldman Sachs Group are managing the IPO. Zynga’s shares will trade on the Nasdaq Stock Market under the symbol ZNGA.

The company, founded by Mark Pincus in 2007, makes games such as FarmVille, CityVille and Mafia Wars, which are available via Facebook. More than 90 percent of Zynga’s revenue comes from the social-networking site, the most popular in the world. Facebook itself is considering raising about $10 billion in an IPO that would value the company at more than $100 billion, a person with knowledge of the matter said last month.

Most of Zynga’s revenue comes from more than 227 million monthly active users who buy virtual items such as energy and tractors while they play free games on the Internet.

Only a small portion — about 7.7 million for the 12 months that ended Sept. 30 — are considered unique paying players.

“We could see that doubling,” Pincus said at a luncheon in Boston for the company’s IPO on Thursday. He did not give a time frame for meeting the target. Paying players, he said, represent less than 3 percent of Zynga’s total number of players.

Zynga chief financial officer David Wehner said that the company has ramped up its capital spending, but ultimately Zynga is targeting an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin in the “40 percent range.”

Executives sidestepped questions about player retention and churn rates, focusing instead on the growing number of monthly active users. Strauss Zelnick, chief executive of video game maker Take-Two Interactive Software, recently questioned Zynga’s business model, saying that the company quickly churns through players. When asked about Zelnick’s remarks, Zynga chief operating officer John Schappert said that his company can quickly launch new games, attracting more players.

In addition, Wehner said a Zynga game’s bookings — a measure of revenue — can maintain a level rate even as the number of daily average users falls.

Bloomberg, Reuters