King Digital Entertainment, developer of the mobile hit Candy Crush and over 180 other games, debuted on the New York Stock Exchange early Wednesday morning.
The company was full of optimism in the weeks leading up to the IPO. CEO Riccardo Zacconi has been quoted numerous times as saying that King could easily be worth $6-$7 billion. The company set its IPO price to $22.50 per share, which would value King at around $6 billion.
However, the optimism surrounding the company faded slightly. Shares in King gaming fell down to $19.00 by the close of trading Wednesday (a fall of 16%). This may not seem like much, but it actually sets the company’s current value at around $5 billion ($1 billion less than anticipated).
According to Reuters, this fall is indicative of a very cautious market right now. People are worried that King is a one-hit wonder, as Candy Crush Saga accounts for over 75% of the company’s revenue. Some believed that the IPO could build off of Twitter’s successful opening in November, but that remains to be seen.
The drop affected other mobile game companies as well. Zynga, the creators of FarmVille, fell 4% and Glu Mobile fell 4.5%. Zynga was also originally valued at about $6 billion, but has since fell to around $4 billion.
The poor first day is not damning by any means. King posted $714.3 in profits before taxes last year. The stock will continue to fluctuate as all stocks do. King is gaining some momentum with its newest hit Farm Heroes Saga, which currently sits at number nine on the iTunes charts and number three on the Android charts. The key to rebounding will be to convince investors that the company is on the rise despite the inevitable decline of Candy Crush Saga.
(Source: Reuters)