| Videos | Channels | Search |
Can $7.6 billion valuation take Candy Crush to next level?
“Candy Crush Saga” maker, King Digital Entertainment Plc, hopes investors will have a sweet tooth for the company’s portfolio of games, as it begins preparing for an IPO. King plans to offer 22.2 million shares of stock at USD 21 – USD 24 per share, valuing the company at up to USD 7.6 billion. The weight of the company’s enormous valuation has crushed some expectations, as long-term potential for the game maker remains to be proven.
King has a portfolio of 180 games that are available for download through mobile devices, Facebook and the company’s own websites. Mobile gaming has become the company’s primary focus, which analysts estimate is a USD 17 billion market, as mobile devices become an increasingly more important aspect of consumer’s lives.
Peter Garnry, Saxo Bank’s Head of Equity Strategy, states that a USD 7.6 billion valuation is “not unreasonably high given the growth rate.” Everyday more than 1.085 billion games are played by the company’s 144 million daily active users; “Candy Crush Saga” is responsible for attracting 93 million of those daily active users. “Pet Rescue Saga,” the company’s second most popular game, draws 15 million daily active users. Even though one individual game is responsible for the success of this company, Peter believes the company’s valuation is not outlandish.
With no debt on the books, Garnry believes King might be priced “a little bit too low.” The company demonstrated its potential profitability when it posted USD 714.3 million in profit last year. The company generates revenue through the sale of virtual items that enhance the gaming experience or enable players to advance to new levels. The company recently replaced all outside company’s advertisements with their own displays that promote the sale of these virtual items.
Popularity amongst the company’s
lesser known games increased in the last quarter. However, revenue in the same
quarter dropped 3 percent, which coincided a dip in “Candy Crush Saga’s”
popularity. This decline has worried investors who believe the company could
have reached its tipping point as the IPO increases concern over the company’s
ability to generate another hit.
Zynga, a social gaming
company, exhibited similar success of the game “Farmville.” Capitalizing on the
popularity of the company’s game, Zynga held an IPO in 2011 and over the last
three years shares in the company have fallen more than 40 percent. The
pressure remains on King to see if it will be able to beat competitors and advance to the next level.
The IPO date is scheduled for
March 25th, and the company will begin trading under the ticker
symbol “KING” on the following day.
02:10 minutes
Tags: candy crush saga, games, ipo, ireland, king digital, launch, mobile, mobile app, mobile phone, mobile technology, price, saxo bank, saxo tv, share price, shares, shares 2014, shares europe, shares prices, shares up, stock, stock exchange, stock market, stock price, stock prices, stock trading, stocks, stocks markets, tech, tech companies, tech company, tech firms, tech sector, tech stocks, technologies, technology, trade idea, trade ideas, trade risks, trader idea, tradingfloor.com, uk economy, zynga