NEW YORK (BLOOMBERG) - Not that long ago, it was a train wreck that drove investors away.
But those who stuck around are reaping the rewards of their loyalty. The stock of Rovio Entertainment Oyj, the maker of the Angry Birds mobile game, is now soaring.
Up 80 per cent this year, its gains help make up for some of the 65 per cent slump that overshadowed Rovio's first 15 months as a listed company, though it's still trading at a lower price. There was one particularly bad day in February 2018, when the shares lost half their value, after which only the most hardened investors stuck around.
Rovio's share-price plunge after its initial public offering turned it into one of the cheapest companies in the industry, said Kimmo Stenvall, an analyst at OP Group in Helsinki. He's advising clients to buy the shares.
The market's initial anxiety lay in its concern that Rovio was a one-hit wonder. Angry Birds had been hugely successful, but nothing else in its pipeline seemed to live up to that promise.
But now, the list of products is looking more promising and Stenvall expects sales to pick up rapidly. He also points to the games streaming service Hatch, which looks set to benefit from fifth-generation mobile networks.
At the start of the year, Rovio introduced Dream Blast, a bubble-popping puzzle game for mobile phones. It generated gross bookings of €6.9 million (S$10.5 million) in the first quarter, or about 10 per cent of the total.
But the company still relies a lot on just a handful of products. Rovio currently gets 85 per cent of its games' gross bookings from its top five games. Angry Birds 2 accounts for almost half of the total.
A sequel to its Angry Birds movie is due to hit theatres in August, which is expected to create new enthusiasm around the brand. Analysts estimate Rovio's sales will grow 13 per cent this year, which will ultimately support the stock, according to Stenvall.
"What separates Rovio from other gaming companies is their amazingly well known Angry Birds brand, their strong balance sheet and net cash, which give them room to manoeuvre," Stenvall said.
