King Digital maker unveiled its plans to enter the U.S. stock market, with some analytics predicting it can be valued at more than $5 billion and herald a flurry of technology company listings this year.
“The successful flotation of Twitter in November and a surge in Facebook’s share price have fueled speculation that a string of technology firms could come to market, including music-sharing service Spotify, lodging service AirBnB and payments company Square, as well as King,” Reuters writes.
However, some analysts wonder whether the game’s creator will be able to maintain its breakneck pace of growth, especially when taking into consideration the difficulty of some other games makers in maintaining success.
Thus, for example, Zynga, the creator of “Farmville,” has seen its share price halve since its initial public offering two years ago, while Finland’s Rovio has struggled to replicate the success of its 2010 hit “Angry Birds.”
Asian markets saw several successful IPOs back in 2013, like game maker GungHo Online Entertainment, but there has not been a recent stellar debut story on the mobile game front in Western markets that has excited investors.
“There’s going to be a fair amount of demand,” for King’s IPO, said Mike Hickey, an analyst at the Benchmark company,. “In the mobile market in general, I think there’s an appetite for people to find ways to participate and in a lot of ways this is a best-of-breed-type play.”
“Candy Crush Saga,” which main goal is moving candies in order to create a line of three in the same color, was the named one of the most downloaded free app of the past year and the year’s top revenue-grossing app.
According to analysts, the addctive game has been downloaded more than 500 million times since its launch in 2012. The basic games are free, but players can pay for bonuses or extra lives.
The IPO prospectus suggested that King’s app may appear to be money-making machine, as it generated about $1.9 billion in revenues last year, or $5 million a day.
“It posted adjusted earningsbefore interest, tax, depreciation and amortization of $825 million in the year, up from $28.5 million in 2012,” Reuters explains.
To compare, Zynga and Supercell, the company behind “Clash of Clans,” both managed to earn around $900 million in revenues in 2013.
While King’s revenue skyrocketed last year from the prior one, its fourth-quarter revenue declined sequentially, falling to $602 million from $621 million in the third quarter.
In its filing, ‘Candy Crush Saga” cretor attributed the decline to “a decrease in the app’s gross bookings, which was mostly offset by an increase in gross bookings across all of our other games.”
“The market is going to kick back a little bit after the Zynga experience,” Hickey said. “The challenge then for King is that they can maintain engagement on ‘Candy Crush,’ which is the majority of their performance, and that’s the issue they’ll have to work investors through.”