King Digital Entertainment PLC, which created the popular Candy Crush Saga game, has filed for its initial public offering. The company has filed to be on the New York Stock Exchange using the ticker symbol KING and aims to raise up to $500 million through its offering.
King Digital crushes Zynga with Candy Crush
According to The Wall Street Journal‘s sources, King Digital has not yet decided on a price for its IPO or a stock market valuation. However, it reportedly wants to see an earnings multiple similar to that of other gaming companies, including Electronic Arts Inc. (NASDAQ:EA) and Activision Blizzard, Inc. (NASDAQ:ATVI). That would value the Candy Crush Saga maker at between $8 billion and $10 billion, depending on estimates for the company’s earnings next year.
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King Digital has risen to popularity on its Candy Crush Saga game, which was first launched on Facebook Inc (NASDAQ:FB) nearly two years ago. Unlike competitor Zynga Inc (NASDAQ:ZNGA), which has struggled since it filed for its IPO, King Digital has already successfully made the transition from being a maker of games for Facebook into a mobile game maker. Candy Crush Saga has grown into one of the most-downloaded free apps on both the iOS and Android mobile platforms.
Measuring King Digital’s success
The Wall Street Journal even compared the success of the game with Zynga Inc (NASDAQ:ZNGA)’s games and found that it 2013, King Digital had $1.88 billion in revenue, compared to Zynga’s $873 million. The year before, Zynga reported more than $1 billion in revenue—much higher than King Digital’s 2012 revenue, although still not anywhere close to King’s 2013 revenue.
According to King, its mobile games have so far been installed on 500 mobile devices, dating back to when it launched Bubble Witch Saga, which was its first mobile game. The company also said 93 million people play Candy Crush Saga each day.
Can King Digital keep growing?
But what investors will want to know before buying into King Digital is whether it can sustain its growth. Zynga Inc (NASDAQ:ZNGA) has been virtually a disaster since its 2011 IPO as the company posted declining revenues this past year and losses for the last three consecutive years. Investors have also been disappointed in Zynga’s recent inability to produce new hit games like its popular Farmville title.
In its filing, King Digital reported that three games—Candy Crush, Farm Heroes Saga and Pet Rescue Saga—make up 95% of its gross bookings. Candy Crush alone made up 78% of the company’s bookings. The company did warn that if gross bookings of its top games end up being lower than expected and it came broaden their game portfolio and increase bookings from games, then it won’t be able to maintain or increase its revenue.