Candy Crush maker's value plummets

2014-03-26 20:52
A detail from the online game Candy Crush Saga a popular, addictive mobile game. (Mark Lennihan, AP)

A detail from the online game Candy Crush Saga a popular, addictive mobile game. (Mark Lennihan, AP)

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New York — 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 début.

King's stock priced at $22.50 on Tuesday, valuing the company at $7.1bn. But it opened on Wednesday at $20.50, down almost 9%, and lost more ground by midday.

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

Its other top games include Pet Rescue Saga and Farm Heroes Saga. 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.

This has drawn comparisons to another game maker, Zynga. 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 on 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 analyses 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 16 at the time of its IPO last November. Facebook, meanwhile, scored 73 when it went public in 2012 and Google, 80 at the time of its 2004 IPO.

Rapid says 90% 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".

By midday Wednesday, the stock was down $2.33, or 10.4%, at $20.17 per share.

- AP
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