King’s initial IPO ends not with a bang, and not quite a whimper, but a sigh. Aiming for $ 21 – 24 per share, it ended the day at $ 19, a drop of 15 % from its initial price of $ 22.50.
Analyst Arvind Bhatia puts it this way:
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. At the mid-point, it’s a successful IPO but perhaps not a runaway success.
The company was hoping to raise around $ 500 million from the IPO, but King may have underestimated investor concerns about the sustainability of their profits from Candy Crush Saga. Perhaps the stock markets have burned one time too many by mobile companies that went public, and struggled to keep their value going.
To put this in perspective, competitor Zynga has also seen its value nosedive since going public, now down to $ 464 per share.
The peg for highest valuation of such a company still remains with Puzzle and Dragons dev Gungho, which went up 4000 % in value in their IPO. Gungho’s stocks have also fallen to earth, but with their successful transition from mobile to console with Puzzle and Dragons Z, Gungho may have paved the path for game companies beyond the peak of their mobile success.