It's 1999 all over again.
You may think Zynga is overvalued, but if so, I'd be curious to see you put that in the form of a quantitative argument.
http://techcrunch.com/2011/11/27/towerdefense/
They're spending more to market new titles:
http://articles.sfgate.com/2011-11-26/business/30446059_1_zy...
As a result of the above two factors alone, their net profit is shrinking fairly dramatically. This is very similar to Groupon (also "profitable" at the time of IPO), and you can see how they're doing for yourself, here: http://www.google.com/finance?q=GRPN (-25% since launch, in case you don't feel like clicking)
Using the 'it's profitable' logic would mean that investing in Beanie Babies Corp while they were making money hand-over-fist would've been the height of financial prudence.
Sure the VCs who have funded the company up to this point are going to make tons of money. But that's their model: stoke interest in a business, take profit, and get out.
OK, so you think it's worth less than $7B, but I suspect you also think it's worth more than $0. What do you think it's worth?
Due to their well-documented culture problems (I'm in games in SF, and only know one person who went to work there ... he's 24 and wanted to 'get rich' ... everyone else stays far, far away), and resulting inability to grow through acquisition, I'm not sure what they actually need an additional billion+ dollars for. To make new games, I suppose, but outside of Cityville and Words with Friends, they haven't been able to make the Farmville lightning strike at will.
All of these new titles cost money, and more money to market, and they're missing far more often than they're succeeding.
It just doesn't seem sustainable, to me.
I think the IPO is chance for the funds that invested hundreds of millions of dollars in the company to profit-grab, pure and simple.
If there are lots of successful, profitable tech companies that are not IPOing, then something else is wrong.