The Candy Crush IPO

In the first quarter of 2014, King Digital Entertainment debuted their IPO on the New York Stock Exchange.  The stock opened at $20.50 per share and fell 15% to close at $19.00.  King Entertainment developed the popular game ‘Candy Crush’ as well as ‘Farm Heroes Saga’ and ‘Pet Rescue Saga’.  The IPO did not meet the expectations that King and other investors had.

With nearly 80% of the company’s revenue coming from a single game, ‘Candy Crush’, many investors are wary as to whether the company will be sustainable.  People want to invest into a company that shows long-term growth, not a one-hit wonder.  So far, King Digital Entertainment has not produced a game that has reached the success that ‘Candy Crush’ has reached.  Although, the other games such as ‘Farm Heroes Saga’, have been steadily climbing the charts, they have not reached that level of success yet.

People have been comparing King’s IPO to Zynga’s IPO which failed miserably.  Although, King’s IPO did deflate since opening, the price per share fell only 15%.  Even though this number is not ideal, some people have invested into the company believing that they will be able to produce another game to reach the success that ‘Candy Crush has achieved’.   Zynga, however, has not been able to produce another game to help them soar to the top of the charts like ‘Farmville’ did.

The good news is that King’s IPO helped European IPO’s grow in the first quarter.  In Europe, there were eight companies to release IPO’s.  This is the most that have been released since 2007.  The eight companies raised over $615 million.  King contributed to over half of that number with nearly $350 million.  The second highest IPO in Europe was UniQure BV, a biopharmaceuticals company that raised $90 billion.

At this point, it is a game of chance when investing into King Digital Entertainment.  Although they have achieved great success with ‘Candy Crush’, only time will tell if they will be able to develop another game that takes over the mobile gaming community.

Featured Image Via: blogs.wsj.com