Candy Crush float fails to impress
Shares in King Digital fell 15% on their first day's trading on the NYSE
Thursday 27 March 2014
Candy Crush Saga is a popular distraction for commuters but apparently not a good investment, with shares in the developer behind the hit smartphone game falling as much as 15% on its debut in New York.
London games studio King raised around $500 million selling 22.2 million shares at a price of $22.50 each on Tuesday night. But shares fell as low as $19.08 when King began trading on the New York Stock Exchange yesterday.
The fall came despite the fact that the $22.50 a share price was the mid-range of expected valuation. Many market watchers were surprised at the $21 to $24 pricing announced earlier this month, which valued the business at up to $7.5 billion.
King, which has a major office near Tottenham Court Road but is domiciled in Dublin, has had huge success with Facebook and smartphone game Candy Crush Saga, which helped the company make a $568 million profit on revenue of $1.88 billion last year.
But investors have expressed doubt over the longevity of the business, with King admitting in its stock market filing that 78 per cent of all its revenues come from Candy Crush. The filing also revealed that the company’s revenue and profit both fell slightly in the fourth quarter of last year.
Comparisons have also been drawn to Zynga, the games developer behind once-popular Facebook game Farmville. Once a dotcom darling that was valued at $7 billion when it floated in 2011, the company’s shares collapsed as the popularity of many of its games waned.
Despite its disappointing float, King’s listing has minted millions for several UK investors, including chief executive Riccardo Zacconi who retains a 9.5 per cent share of the business.
Book runners JP Morgan, Credit Suisse and Bank of America Merrill Lynch will also have banked millions from the float, with Barclays, Deutsche Bank and RBC Capital Markets also working on the offering.
King was founded in 2003 by in 2003 by Riccardo Zacconi and Toby Rowland, son of former Lonrho chief executive and Observer owner Roland “Tiny” Rowland.
The company originally developed small-stakes gambling games for sites such as Yahoo and MSN, before launching games on Facebook and mobile.
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