Candy Crush IPO Banks, Share Price News: Free to Play Online 'Saga' Game Maker King Hints at Trying to Win Investors
King Digital Entertainment, which makes the popular Candy Crush saga game, said on Wednesday that it has planned an initial public offering of stock. The offering will be led by JPMorgan Chase, Credit Suisse and Bank of America Merrill Lynch.
This comes after a host of companies in the digital sphere such as Facebook and Twitter have opted for IPOs to increase their company's worth and cash in for shareholders. The Candy Crush manufacturer is expected to price its shares from $21 to $24 each, which entails valuing the company at $7.6 billion, meaning that its stock would be valued at 54 percent higher than that of Zynga, the maker of FarmVille and Words With Friends.
The company King's hit game Candy Crush contributes about 80 percent of its earnings, with 97 million players each day, turning the 11-year-old company into one of the biggest success stories in video games for years, reporting over $1.9 billion in revenue last year when it had only $164 million in 2012.
The new income strategy for apps these days is simple: make the game free to play but players may buy virtual items or opportunities to increase their progress or success in games, where virtual items can vary from cheap to very expensive. Most players spend nothing, but some spend thousands.
Another such company is Supercell of Finland, which focuses on mobile device games and made the game Clash of Clans, with a revenue in 2013 of $892 million.
Experts question whether King Digital can succeed considering all of its revenue comes from the one game. The company admits that it expects Candy Crush to decline over time and contribute less to sales, saying that the game's gross fell in the fourth quarter of last year but claims that other games will manage to offset that drop. Still, the company might be trying to cash out before Candy Crush declines in popularity.