King IPO: Still a Bad Bet for Investors

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King IPO: King Digital Entertainment PLC said today (Wednesday) it expects a market value of as much as $7.6 billion in its initial public offering.

King IPO

On Feb. 18, the maker of several hit social Internet games, including tour de force "Candy Crush Saga," filed for a U.S. initial public offering (IPO). The stock will be listed on the New York Stock Exchange under the symbol "KING," with J.P. Morgan Chase & Co. (NYSE: JPM), Credit Suisse Group AG (NYSE: CS), and Bank of America Merrill Lynch (NYSE: BAC) serving as lead underwriters.

Today, King said its IPO of 22.2 million shares will likely be priced between $21 and $24 per share.

The company itself will sell 15.5 million shares in the offering, while stockholders, such as Apax Ventures, will sell 6.7 million shares. According to the IPO filing, entities related to Apax will own 44.2% of the company following the offering. Founder and Chief Executive Officer Riccardo Zacconi will maintain a 9.5% stake.

The King IPO's official pricing is set for later this month, on March 25. All in all, it's projected to raise as much as $532.8 million – a smidge over the $500 million figure King had disclosed in the February filing.

Here are some impressive updated numbers on King's inner workings leading up to a March 26 market debut:  

  • King offers 180 games via Facebook, its own website, and on mobile devices through app downloads.
  • King's most popular game, "Candy Crush Saga," currently accounts for approximately three-quarters of King's revenue. It's played by 93 million people daily, with more than 1 billion plays every day. The game has been downloaded a whopping 500 million times on mobile devices since its launch in 2012 and is the top game on Facebook (Nasdaq: FB).
  • Two other King games – "Pet Rescue Saga" and "Farm Heroes Saga" – take up the second and third top spots on Facebook, according to app tracker AppData's January numbers.
  • King is killing it on mobile. Candy Crush and yet another King game, "Papa Pear Saga," are among the 10 most downloaded apps on Apple Inc. (Nasdaq: AAPL) devices, according to app tracker AppAnnie's December data. And for more than a year, Candy Crush has been tied with Supercell's "Clash of Clans" and "Hay Day" as the top-grossing iOS and Android game.
  • King employs 665 people and posted a profit of $567.6 million on revenues of $1.89 billion in 2013, up from $7.8 million in 2012. Around 78% of revenue came from Candy Crush.

Even with such strong usage numbers, there's one reason for investors to steer clear:

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