On Wednesday, King Digital’s debut on the New York Stock Exchange hasn’t exactly set the world on fire. The stock, currently trading as KING, started out at $20.50 per share, about 9% lower than the previously estimated $22.50 announced the day before (At time of writing, the stock had dropped down and is hovering around $18.50).
While the NYSE has had healthier debuts from some tech companies, it’s clear that investors are hesitant to embrace all tech IPOs. This is evident by a similar case with Zynga in 2011. The company debuted at $11 per share, but now hovers at around $5. The main problem Zynga had was its lack of strong mobile presence, which King has in spades. If that’s the case, then why would its stocks drop so dramatically now?
The issue most likely lies in King’s flagship title Candy Crush Saga. While it’s obvious that Candy Crush does rake in a lot of money for King.com, it is the majority title. The game made up 78% of King’s $1.88 billion dollars in revenue in 2013 alone. That’s one title out of 8 in King’s current lineup. It’s very likely that not one of those games even comes close to the revenue that Candy Crush makes, and in turn, investors may see King as a one-trick pony.
Hopefully this doesn’t turn out bad for King, as there is talent behind the company. But as examples like this and the recent Flappy Bird craze show, the mobile games market is a volatile place. Some companies can keep afloat with consistent titles, but the big money-makers, the big gambles, can almost be like the lottery when it comes to success.