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Candy Crush game maker's IPO to face investor scrutiny

Published on Mar 25, 2014 8:17 AM

SAN FRANCISCO (REUTERS) - King Digital Entertainment's Candy Crush Saga has gone viral on smartphones worldwide, but the company may struggle to replicate that enthusiasm with its upcoming US$7.6 billion (S$9.7 billion) initial public offering.

The flotation this week will be closely watched in the fast-growing US$17 billion mobile gaming industry, which is keen to emerge from the shadow of Zynga, which has lost half its value since its 2011 IPO valued it at US$8.9 billion.

That may be a struggle for London-based King. While the company has drawn plaudits for catching the mobile gaming wave with the most downloaded free app and becoming the top revenue producer of 2013 on Apple's app store, it relies on its marquee game for three-quarters of its revenue.

"The red flag for this IPO is that King's revenues and fortunes are built on one game," Michael Yoshikami, chief executive of Destination Wealth Management, said. "I would be inclined not to invest in stock like this." When upstarts like King and Zynga go public with valuations approaching those of more established players in the tech space,"it's all about when (the tech bubble) is going to pop," he said.

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