Monday, October 20th13.6°C
23836

'Candy Crush' maker King Digital's stock opens below IPO price in public debut

NEW YORK, N.Y. - A crush it isn't.

Wall Street is giving King Digital, the company behind the popular mobile game "Candy Crush Saga," the cold shoulder in its public trading debut.

King's stock priced at $22.50 on Tuesday, valuing the company at $7.1 billion. But it opened on Wednesday at $20.50, down almost 9 per cent. Its shares lost more ground by the day's close, falling more than 15 per cent.

King Digital Entertainment PLC had $1.88 billion in revenue last year. That's more than 10 times its 2012 revenue of $164.4 million.

But some analysts have questioned whether King would be able to repeat the success of "Candy Crush," which has been far more successful than any of its other games. Its other top games include "Pet Rescue Saga" and "Farm Heroes Saga."

"It's a one-hit-wonder," said Francis Gaskins, director of research for Equities.com and president of IPOdesktop.com. "The history of game companies is that none of them can prove that they can consistently introduce new products to grow revenue. They say they can, but they can't."

"Candy Crush" has been immensely popular but Gaskins said it is a maturing product that consumers are growing tired of. He pointed to a slowdown in revenue and profit between its last two quarters as an indicator. Its current quarter wraps up Monday and he thinks investors may be anticipating another dip in revenue. He suggested the company may have fared better if it had gone public in September at its peak.

King's debut has drawn comparisons to another game maker, Zynga Inc.

Zynga had a much-ballyhooed IPO in late 2011, but the company faltered after having trouble transitioning into a mobile company from one whose games are played mostly on a desktop computer.

But Ricardo Zacconi, King's co-founder and CEO, told CNBC Wednesday morning that the company is "not just a one-hit wonder" and pointed out that it has three games in the top 10 on Facebook.

King may also be faring better than other high-profile IPOs when it comes to its financial health. Rapid Ratings, which analyzes companies' financial efficiency, gave the Ireland-based company a score of 86 on a scale of 0 to 100. In comparison, the firm rated Twitter Inc. 16 at the time of its IPO last November. Facebook Inc., meanwhile, scored 73 when it went public in 2012 and Google Inc., 80 at the time of its 2004 IPO.

Rapid says 90 per cent of companies with a rating below 40 defaulted on their debt at some point.

King had 665 employees at the end of 2013. Zynga, meanwhile, is cutting jobs but still has about 2,100 employees, down from a peak of 3,300 in 2012, at the tail end of the "FarmVille" craze.

King is trading on the New York Stock Exchange under the ticker symbol "KING."

Shares fell $3.50 to close at $19.01 Wednesday.

___

AP Business Writer Sarah Skidmore Sell contributed to this report from Portland, Ore.

The Canadian Press


Read more Business News

23718


Recent Trending




Today's Market
S&P TSX14337.77+110.09
S&P CDNX811.351.22
DJIA16399.6719.26
Nasdaq4316.075+57.637
S&P 5001904.01+17.25
CDN Dollar0.8861-0.0004
Gold1247.30+8.30
Oil81.49-0.13
Lumber330.70-3.90
Natural Gas3.674-0.092

 
Okanagan Companies
Pacific Safety0.10-0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.12+0.01
Cantex0.055-0.025
Anavex Life Sciences0.191+0.001
Metalex Ventures0.050.00
Russel Metals32.28-0.07
Copper Mountain Mining1.99+0.05
Colorado Resources0.15+0.005
ReliaBrand Inc0.0111-0.0019
Sunrise Resources Ltd0.060.00
Mission Ready Services0.450.00

 



23846

FEATURED Property
21080961547 Pinot Noir Drive
4 bedrooms 5 baths
$1,998,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Keep it rubber side down

This time of year, I always worry about which friends of mine will get caught going off the road in adverse weather conditions. With a little preparation most accidents can be avoided. Having won the...


Big bank predicts rate hike

Photo: Thinkstock.comThe end of record-low rates is nigh, according to one major bank, which has taken a stance and predicted when the Bank of Canada will raise its long-standing overnight rate. &ldq...


Experts share strategies in Kelowna

The third week in October is “Small Business Week”, a week dedicated to supporting local, small businesses. The week was designed to bring awareness to Canadians about the role small busin...

_





23803


Member of BC Press Council


23824