King games in the Stock Market

Posted on Mar 26 2014 - 12:56pm by Andrew Perrott

On today March 26, 2014 the developer of Candy Crush began to trade stock. Marking this monumental occasion, the stock of King fell $2.52 or 11% right out of the gate according to USA Today. While Candy Crush is wildly popular at this time and arguably at its height that was not enough for it to see instant success in the stock market. Many speculate that King games might follow in the path of Zynga which launched in December 2011 when Farmville was at its hype. While many can and do speculate on the success or failure of mobile games on the stock market one might do well to analyze the entire situation.

When Zynga launched in 2011 it was at the height of the Farmville mania. According to a NASDAQ search of Zynga’s stock history the opening price of Zynga stock was  $11.00 and it fell to $9.50 at the end of its closing day. Much King did just today Zynga’s stock prices fell on its opening day.

Unfortunately for Zynga there hasn’t been much success in the market since its launch. With a few exceptions, their stock has fallen steadily since it went public. In a 52 week analysis of Zynga one can see that the highest market price of their stock is $5.89 and the lowest they have dropped was $2.50, these prices are obviously a lot lower than the price on their launch date.
King games is started out today at a price of $22.50 and dropped about 11% around midday. Dan Primack of CNN Finance has drawn many parallels between King and Zynga and has posted side by side comparison of the two companies. Overall King games has a higher revenue than Zynga. While Zynga’s revenue is $873 million a year, King games is $1.88 billion dollars which is more than double what Zynga brings in. However the overall current success of the company is not enough to create an instant smash at the stock market. Analysts state that the reason why these game companies generally flop in the stock market is that investors are afraid to sink money in things that are fads. Zynga started public trading at the height of Farmville and when Farmville began to shrivel and wilt in the public view so did their stocks. Fearing a repeat of this and other fads in the stock market it does tend to deter investors.
One thing that people cannot forget is that mobile technology is still fairly new along with these companies that create media for them. It probably isn’t fair to compare King to Zynga because while they have many similarities they are still two entirely different companies. While it is unsure at this moment what to say about King games and the future of mobile games in the stock market it is interesting to see the new media and technology seeping into the public market. King also states that it is currently working on another game that could sweep in more people to enjoy their works.

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