During its initial public offering (IPO) last Tuesday, Candy Crush Saga creator King Entertainment Plc netted an unprecedented $7.1 billion valuation. This is currently the largest valuation ever given to a mobile gaming company.
Back in 2011, Zynga set the bar high after received a valuation of just under $7 billion. With King Entertainment's IPO however, that record has officially been broken. When the IPO was launched, King Entertainment shares were priced at $22.50 per share, which is considered as the midpoint of the company's projected prices. The $7.1 billion valuation is one of the highest this year and the company has already raised approximately $500 million.
"It's fair to say that if it was a very high-demand IPO, we would've seen the price at the upper end of the range," said Arvind Bhatia, an analyst from Sterne Agee. "At the mid-point, it's a successful IPO but perhaps not a runaway success."
King Entertainment is a mobile gaming company that specializes in developing casual games. The company was founded back in 2003 in Sweden but went bankrupt during the same year. Back then, King Entertainment was known as King.com and the company was saved from going under by a last minute investment in the same year and the company was able to pull through the crisis. After 2 years, King Entertainment finally turned a profit in 2005.
However, it is best known for Candy Crush Saga, a gem matching game similar to Bejeweled. The game was first released as a Facebook game and it is currently one of the most popular games on the social network. The game ousted former top dog FarmVille as the most popular game on Facebook last March 2013. Candy Crush Saga was also released for iOS and Android. By November of last year, Candy Crush was the third most popular game in Google Play. The company is now trading on the New York Stock Exchange (NYSE) under the ticker "KING."
While King Entertainment's IPO garnered very impressive results. Analysts are concerned that the company may follow the footsteps of Zynga. Zynga also enjoyed a successful IPO but the company lost around half of its value in succeeding months. Wall Street pundits are also questioning whether King Entertainment can follow up on the success of its most popular title Candy Crush Saga. Moreover, the fact that around 75 percent of the company's profits come from Candy Crush alone is also a cause for concern.
