“Shares in King Digital Entertainment Plc fell as much as 15 percent in their Wednesday debut, underscoring investor concern about the company’s reliance on ‘Candy Crush Saga’ and dampening hopes that its coming-out party could revive investor interest in the mobile gaming industry,” Malathi Nayak reports for Reuters. “Mobile game industry executives had looked to London-based King’s IPO, the largest by a gaming company since Zynga Inc went public in 2011, to help sweep aside skepticism over a notoriously fickle, volatile market. But King’s shares fell to a low of $19.08 in morning trade from their IPO price of $22.50, which valued the company at about $6 billion.”
“The company offers over 180 games but its two-year-old “Candy Crush Saga” game, in which users move candies to line up at least three of the same color, accounted for over three-quarters of King’s revenue for the last three months of 2013,” Nayak reports. “King’s dismal debut dragged down other gaming stocks on Wednesday. Zynga shares fell 4.5 percent, while smaller player Glu Mobile slipped 2.3 percent. When Zynga debuted in 2011 with about the same valuation as King, its stock ended down 5 percent on opening day. ‘Farmville’ maker Zynga’s market value has since shrunk to just over $4 billion, falling victim to concerns about the danger of investing in companies that rely heavily on a hit game.”
“There are some signs new titles from King’s portfolio may be gaining traction. Analysts have pointed out that ‘Farm Heroes Saga’ has seen momentum since its January mobile launch. The title has since landed on the list of top 10 highest-grossing apps on Apple’s iOS platform, but whether the game will prove to be a money-making title in coming months remains to be seen,” Nayak reports. “King sold 15.5 million shares of the 22.2 million offered, with the rest coming from stakeholders including private equity firm Apax Partners, which remains the biggest shareholder. King raised about $500 million in its IPO.”
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‘Candy Crush Saga’ maker King files for $500 million IPO – February 18, 2014