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Zynga plans to raise around $850 million to $1.15 billion at a $5.9 billion to $6.99 billion valuation in an initial public offering that will be priced on Dec. 15 and begin trading the next day. Counting options, the value would be $7.6 billion to $8.9 billion.

Finally setting its long-awaited initial public offering in motion, social game maker Zynga has named a price range for its offering and unveiled its investor roadshow pitch for why company executives think it is a good investment. Zynga originally filed to go public in July 1.

Moments ago, Zynga filed new papers with the Securities and Exchange Commission that set the price range for its IPO at $8.50 to $10 a share. The company is reportedly planning to issue 100 million shares (about 14.3 percent of its shares) and go public on Dec. 16. Total shares outstanding after the offering will be 699.3 million. Zynga may issue 15 million more shares than it indicated it would raise when it filed its original papers.

[Update: Zynga has 200 million or so options issued as well, which means that the fully diluted valuation is higher, at $7.6 billion to $8.9 billion.]

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The valuation is much lower than the $15 billion to $20 billion that was rumored as Zynga’s expected valuation when it first filed. By comparison, rival Electronic Arts is valued at $7.7 billion today. And Activision Blizzard is valued at $14 billion. The pricing shows just how volatile market valuations have been.

Mark Pincus, chief executive, isn’t planning on selling any of his own shares. Pincus will control about 36 percent of the voting power of Zynga after the offering is complete.

The price of the offering is subject to change, given that Zynga will now begin a nine-day roadshow to pitch investors about why it is valuable. Still, the expected valuation is below previous estimates. Zynga’s profit growth has slowed and its user numbers have declined. AppData reports that Zynga’s monthly active users are about 215 million, compared with 232 million in July.

Zynga will trade under the stock symbol ZNGA on the Nasdaq stock market. In its offering statement, Zynga said it has 227 million monthly active users and 54 million daily active users. The company’s social games such as CityVille are played 2 billion minutes per day.

Just two weeks ago, the company said a third-party analysis had valued Zynga at $14.05 billion, which is about the same as Activision Blizzard, the largest video game publisher, with four times Zynga’s revenues.

But Zynga is still on top of the Facebook charts. CityVille, which is a year old today, still has 49.7 million monthly active users. And the newly launched CastleVille has more than 20.8 million users, making it one of the fastest, if not the very fastest, growing games in all of history. CastleVille launched just 17 days ago. Zynga said its games are played by more daily users than the next 14 social game developers combined.

Zynga was founded in 2007 and has been riding the wave of Facebook’s growth and the popularity of lightweight social games, which are free to play. In those games, such as FarmVille and CityVille, users play for free and pay real money for virtual goods.

Zynga has made money this year, but its growth slowed in the September quarter. Zynga has already waited a long time for its IPO, but the market window hasn’t been right. Companies such as Groupon and Angie’s List have gone public, but the market has been volatile due to uncertainty in Europe.

The company reported net income of $12.5 million in the third quarter ended Sept. 30, down 54 percent from $27 million a year ago, according to an updated S1 filing with the Securities and Exchange Commission. The performance isn’t stellar, but it’s not so bad as to suggest Zynga’s planned initial public offering is in trouble.

Revenue was $307 million in the quarter, up 80 percent from $170.6 million a year ago. In other words, Zynga is working harder for the profits it gets by generating a lot more revenue compared to the past.

In the second quarter, Zynga reported only $1.4 million in profits on $280 million in revenue, so the third quarter report is an improvement on a quarter-to-quarter basis.

Pincus closed the video by saying that Zynga is launching more new games than at any time in its history.

“We’re excited and we hope you are too,” he said in closing.

To view the video, click on this link.

Correction 12/3/2011: The valuation calculations in the update have been corrected.

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