Zynga Inc, developer of popular Facebook games like FarmVille and Mafia Wars, is all set to hit the capital market with an initial public offer (IPO). The company filed with regulators for an IPO of up to $1 billion on Friday, hopping that its close ties with Facebook will be a key to its future success.

However, Zynga's relationship with Facebook can also turn out to be a risk. On the one hand, it gets access to Facebook's over 500 million members, and it keeps people returning to Facebook. On the other hand, it depends on Facebook for almost all of its revenue and players. Any deterioration in our relationship with Facebook would harm our business, Zynga said in the risk factors section of its IPO filing.

Zynga's games are free, but it gets revenue comes mainly from selling virtual items such as tractors and weapons used by players in the games.

Last year, due to a change in Facebook's policy involving credits, in which Facebook wanted to take a 30 percent cut of transactions over the currency that Zynga players use to buy virtual goods, the online game company was at point prepared to walk away from Facebook.

However, Zynga doesn't seem to get hurt so far by Facebook's 30 percent cut from virtual goods sold on its platform. At 232 million monthly actively users and (revenue of) $235 million, that is $1 per monthly active user per quarter, which is impressive, Michael Pachter, an analyst with Wedbush Securities, told Reuters.

As per the prospectus, in the three months ended March 31, Zynga's earnings before interest, taxes, depreciation and amortization (EBITDA) was $112.3 million, up 20 percent from the same quarter a year earlier.

According to a source, Zynga's IPO could raise $1.5 billion to $2 billion and value the company at $15 billion to $20 billion. The company gave $1 billion figure in its filing for calculating registration fees, while the final size of the IPO could be different, Reuters reported.

Paul Verma, a senior analyst at eMarketer, said out of all the Internet and social media IPOs we've seen so far, Zynga is one of the more solid ones. LinkedIn hasn't produced significant profits so far, Pandora is unprofitable and Twitter hasn't come close to generating significant revenue. Zynga has a lot to show for it, Verma said. 

So far, Zynga has not yet provide any details about the number of shares it is planning to sell. Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital, JPMorgan and Allen & Co are underwriting the IPO .

Also Read:

Who will be Mark Zuckerberg's Eric Schmidt to manage Facebook post-IPO?

Facebook IPO: How justified is a $100 billion valuation for a mere $4 billion company?