Sour stock market debut for ‘Candy Crush Saga’ makers

Shares in King Digital Entertainment fell as much as 15% in their debut yesterday, underscoring concerns about the firm’s reliance on Candy Crush Saga and dashing hopes its coming-out party would revive investor interest in the mobile gaming sector.

Mobile gaming executives had looked to London-based King’s initial public offering to help sweep aside scepticism over a notoriously fickle, volatile market.

However, King’s shares fell to a low of $19.08 (€13.84) in morning trade from their initial public offering price of $22.50, which had valued the company at about $6bn.

The company offers over 180 games but Candy Crush Saga accounted for over three-quarters of King’s revenue for the last three months of 2013.

“Once you have a hit, it’s hard to make a string of hits. How many bands were The Beatles?” Roger Kay, analyst at research firm Endpoint Technologies Associates said. “Also, there have been a lot of high-priced initial public offerings and mergers and acquisitions [of late] and when valuations get frothy, investors get disappointed when returns don’t measure up to expectations.”

King sold 15.5m shares of the 22.2m offered, with the rest coming from stakeholders including private equity firm Apax Partners, which remains the biggest shareholder. King raised about $500m in its initial public offering.

In February, King said an average 144m daily active users played its games over 1.4bn times per day.

King, formerly known as King.com, was saved from bankruptcy by a last- minute infusion of capital on Christmas Eve 2003. It finally turned a profit in 2005 and has made money ever since.

Candy Crush, which was first launched on Facebook in April 2012, was released on Apple devices in November 2012 and on Android a month later.