Mar 26 - King Digital Entertainment's first day of trading on the NYSE was sour, and despite the pre-party build up- some warn the hype is already fizzling out. Bobbi Rebell reports.
King Digital failed to hold court in its NYSE debut. The stock of the Candy Crush Saga maker, opening, and staying, below its offering price of $22.50 a share. Pricing can be more of an art- than a science. Reuters Breaking Views Rob Cyran: SOUNDBITE: ROB CYRAN, COLUMNIST, REUTERS BREAKINGVIEWS (ENGLISH) SAYING: "It's basically impossible to price this company. That is the problem, you know, it had a ton of profits last year and the question is how long will those profits extend? And no one knows the answer. So it's a matter of just kind of sticking your finger in the air and unfortunately the bankers did it and what looked right yesterday is not right today." And that goes straight to the fear investors have with King Digital. What's hot one day can be ice cold the next. After all, the vast majority of King Digital's profits come from two-year old Candy Crush Saga. Case in point- Zynga. It went public in 2011 riding the wave of its hit Farmville game. Its market valuation has collapsed from $7 billion to just over $4 billion. But Rapid Ratings CEO James Gellert says this time, with King Digital, is different: SOUNDBITE: JAMES GELLERT, CEO, RAPID RATINGS (ENGLISH) SAYING: "Before Candy Crush and even despite Candy Crush there are other properties and while they aren't as successful, they have been producing profits for this firm for quite a number of years. So they have been profitable in four of the last five years- in contrast to Zynga has only been profitable in one of the last five years." He makes the case that King Digital is a more mature company- it's been profitable since 2005. SOUNDBITE: JAMES GELLERT, CEO, RAPID RATINGS (ENGLISH) SAYING: "Whether people believe that this name is going to be able to replicate the success of Candy Crush or not will remain to be seen and of course now that they are in the public arena they will have to be opening themselves up to much more scrutiny and they are going to have to hit their numbers quarter by quarter or they are going to be - they will continue to see negativity and downward pressure." King Digital's tough first day does not bode well for rivals like Kingdoms of Camelot maker Kabam and War Commander maker Kixeye - which are expected to seek market listings or new financing.