King Games’ IPO Dives in Day 1 of Trading
The day we’ve all been waiting for with bated breath has arrived: King Digital Entertainment, makers of the worldwide phenomenon Candy Crush Saga, went public today. Last night King revealed their stock would open at $22.50 USD per share. By selling 15.5 million shares, King successfully raised over $500 million. Their biggest stakeholder, private equity firm Apax Partners, also sold approximately 6.5 million shares, for a total of 22 million. But all is not well for King–after the opening bell at the New York Stock Exchange, their Candy Crush stock began to drop in a hurry.
By 10:00 AM EST, stock in King was down to just $20 a share. The stock (traded under the simple symbol KING, which we thought would have been taken by now) made a resurgence in the next hour, but was unable to climb into the black, instead entering a slow downward spiral that lasted for the rest of the day, with brief and tiny spikes throughout. By 4:00 pm EST, when the NYSE rung its closing bell, King had reached a daily low of $18.90. Candy Crush stock closed at an even $19, but had dropped back to $18.92 after hours as of this writing.
In a statement for King Digital, CFO Hope Cochran had this to say:
“To us it’s not about today but [a run] over the course of years and executing our plans….Having a stable group of global franchises is really what we’re focused on.” (via Reuters)
If you’re cynical, you’re probably thinking “of course she’d say that.” After all, if the opposite had happened and King gained several points over the course of the day, Ms. Cochran would we saying something about how the market is bullish for King’s products. But she raises a good point–there’s no reason to judge King too harshly by a single day’s journey on the NYSE. Even blue-chip stocks like Disney can have off days. But others are getting out while the getting’s good. An analyst for Sterne Agee said that, in his opinion,
“There are a lot of IPOs in the pipeline so investors are not starving…and are being picky. Today’s action also says investors are not going to ignore fundamentals.” (Reuters)
In other words, King priced itself too high and investors can find better stocks. Without buyers, King may crumble and take Candy Crush Saga with it. We’ll keep an eye on this stock for you so you can judge for yourself.