King Stumbles Out Of the Gate
This week, King , maker of the smash hit mobile game Candy Crush Saga, went public at $22.50 per share. This was a widely anticipated IPO, yet shares immediately pulled back. Investors have been concerned at how heavily dependent the company is on its one single hit, with its second and third top performers falling way behind the success of Candy Crush, despite all being very similar variations of the same game.
Investors have also been concerned about King's "freemium" business model, where gamers play for free, and then buy in-app purchases. Comparisons to Zynga were unavoidable, as the company also went public after the success of a freemium model game, and then performed poorly as a stock after its IPO.
In this segment from Friday's Tech Teardown, host Erin Kennedy and Motley Fool tech and telecom bureau chief Evan Niu discuss the mobile gaming business and how difficult it can be for a company to create a second blockbuster despite the massive success of its first. Evan also discusses the major risks investors in King face today.
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The article King Stumbles Out Of the Gate originally appeared on Fool.com.Erin Kennedy has no position in any stocks mentioned. Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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