Author Topic: Is $7.6 billion a bargain for 'Candy Crush' maker?  (Read 305 times)

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Offline Rapunzel

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Is $7.6 billion a bargain for 'Candy Crush' maker?
« on: March 14, 2014, 01:34:05 AM »

Is $7.6 billion a bargain for 'Candy Crush' maker?

Game developer King Digital is seeking a steep valuation in its upcoming IPO. It's aggressive for a company with just one hit product, but still a discount to some peers.
By MSN Money Partner 13 hours ago

Candy Crush Saga © GABRIEL BOUYS/AFP/Getty ImagesBy Renée Schultes, The Wall Street Journal

King Digital Entertainment is a casual gamer with a serious valuation.

The Wall Street Journal on MSN MoneyThe "Candy Crush Saga" maker set an indicative price range for its New York initial public offering Wednesday, valuing the casual-games developer at up to $7.6 billion.

King still needs to prove its business is sustainable. But its proposed valuation at least seems to offer investors some buffer against the risk of a one-hit wonder.

The success of Candy Crush has left King with big shoes to fill. Although Candy Crush is still the second-highest grossing game in the U.S. app charts a year after launch, bookings fell in the fourth quarter. And the game generates 78 percent of King's sales before app stores take their cut. Sure, rapid growth of new titles such as "Farm Heroes Saga" is promising. But with 20 million daily users, it has a long way to go to reach Candy Crush's 97 million.

Still, at between nine and 10.5 times 2014 earnings, according to bankers' consensus forecasts, King is being pitched at a discount to peers. That assumes 30 percent earnings growth this year.
“The time is now near at hand which must probably determine, whether Americans are to be, Freemen, or Slaves.” G Washington July 2, 1776

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